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 julieann
Joined: 11 Apr 2007
Posts: 1
1.32 Dollars($)
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 Posted: Wed Apr 11, 2007 9:02 am Post subject: My mother is selling her |
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My mother is selling her home that she owns outright, and she will be moving in with me after my divorce. She will be paying off my mortgage. How does this affect her tax wise and any other way (we plan to have a lawyer draw up a document that the home is part of the inheritance).
Also, I plan to have my husband quitdeed the title to me and pay him his share of the equity through the divorce and once the divorce is final my Mom will pay off the mortgage that is in both of our names.
Can anyone think of a reason this would not work or could have future ramification with my ex to be? |
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Oberle
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0.10 Dollars($)
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| Posted: Wed Apr 11, 2007 11:20 am Post subject: |
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Hi Julie,
Tax wise, when your mother sells her house, there are capital gain taxes that need to be paid if a profit is made from the sale.
But let me also tell you that there are capital gain tax exemptions above which taxes will be due but if the profit is less than the exemption limit than no taxes need to be paid.
Oberle |
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H. Crespi
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0.10 Dollars($)
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| Posted: Wed Apr 11, 2007 1:11 pm Post subject: |
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| Quote: | | My mother is selling her home that she owns outright, and she will be moving in with me after my divorce. She will be paying off my mortgage. How does this affect her tax wise and any other way (we plan to have a lawyer draw up a document that the home is part of the inheritance). |
Julie, as you have planned out the things, it should work out properly.
While the house is sold by your mother any applicable capital gains taxes will have to be paid by her on the profit made if such profit exceeds the exemption limit of $250,000 (but the house should have been used as her primary residence for 2 years of the last 5 years before its sale). And your husband can quit claim his share over to you if both of you mutually agree to it. |
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Samantha
Community Mentor
Joined: 16 Sep 2005
Posts: 1539
Location: MASSACHUSETTS
137.28 Dollars($)
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| Posted: Wed Apr 11, 2007 10:43 pm Post subject: RE: home selling issues |
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Hi Julieann,
Your plan at the moment looks to be perfectly ok. If your would-be ex-husband is willing to hand over the property-title to you, that's a good thing for you. You can surely pay him his share of equity and when the divorce is over, your mom can repay the loan on your behalf.
Regarding the tax issue, your mom will have to pay capital gains tax if she is able to sell at a profit and provided she does not qualify for the exemption.
Now, your mom will be paying the loan, but she cannot get tax deduction benefits on mortgage interest and neither you nor your soon to be ex-spouse can get it. This is because neither is your mom on the title nor does she have her name on the loan. Also, you as well as your spouse aren't paying for the loan any more. So, the question of tax benefits here does not arise.
I cannot think of any reason as to why your plan will not work. I think you can go ahead.
All the best.
May god bless you.
Samantha |
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