if i transfer my property on my sons name, would he have to pay taxes when he sells that property?
If i transfer my property on my sons name, would he have to pay taxes when he sells that property? And if yes, then how is that calculated?
- No MercyLv 71 year ago
yes he will have to pay taxes. unless he makes it his primary residence and lives there longer than 3 years
- SlumlordLv 71 year ago
You would have to pay taxes for the transfer if you are gifting him more than the federally allowed limit of 15K. IE If the value of the house is more than 15K then you have to pay gift taxes on the overage.
He would have to pay taxes when he sells it but only on the profit from the basis (value) of the house since you gave it to him and he could avoid tax on the first 250K of profit if he lives in the house for 2 years.
- JudyLv 71 year ago
It's complicated. Usually better tax to have n=hin inherit it.
- R KLv 71 year ago
that would depend on what you paid for the property and what he sells it for.
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- DEBSLv 71 year ago
State laws apply. If you know your state, then you can easily do a google search to get information. Questions like this here you will get people answering based on their local knowledge without realizing they are giving you advice for one state only.
- 1 year ago
I have thought about this, transferring property to my kids by selling it to them at some price which is considerably less than it's value. For instance, selling a $500k rental house for $200k and then the rental income would pay off the $200k and provide income to me and the house would be the child's. And they would owe taxes when sold.
- MaxiLv 71 year ago
Taxes and legal transfers depend on which country.........
- Anonymous1 year ago
- curtisports2Lv 71 year ago
If you give it to him before you die, his cost basis in the property will be your cost basis - whatever you paid for it plus the expenses of the purchase that you can document from the closing statement, plus any capital improvements you made - that you have receipts for - while you owned it.
So let's say you paid $40k for it, paid $1,000 in purchase expenses, put two roofs on it, replaced the furnace, replaced two water heaters, put siding on the house, remodeled the kitchen and bathroom(s) - and spent $74k doing all of that. Your cost basis is $115k. If the house is worth $300k today and your son sold it for that much after his expenses of the sale, then he has a capital gain of $185k. Unfortunately, you get no credit for the inflation factor on those years of ownership and the money spent on those improvements. Now, if he lives in the house for at least two years before he sells it, he will get the homeowner's exemption. If not, then he will be facing the capital gains tax.
However, if you leave it to him in your estate instead of giving it to him while you live, his cost basis will be its market value when you die. There won't be any tax issues if he sells within a short time after that. Any increase in value from that point he may be taxed on.