Ask TaxMama.Com Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 6, Issue 273        August 27, 2004

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Dad's House » From: New York Dear TaxMama: My father, 76, is a widower. After owning a vacant lot in Florida for 30+ years, he just sold the land, in order to use the funds to build a tiny handicapped accessible apartment onto the back of my house. He is moving in so I can take care of him. He will have a capital gain of $56,000 on the land sale. He gets Social Security only, no savings, no pension. He has not had to file taxes in many years since retiring. Is there any way to reduce the capital gains on this property, or estimate how much he would have to pay, as the proceeds are going to provide a roof over his head? Beth Hi Beth, This is a great time to go meet with a good, local tax pro. There's a way to reduce the capital gain a little bit by gathering all the expenses related to that vacant lot over the years - property taxes, cleaning/clearing, gardening or maintenance - none of which were ever deducted. That will only help a little bit. But a good pro can help you identify local expenses I don' know about that might relate to the lot. Have them run some numbers. See what happens if you were to add Dad to the title of your house. Since he IS paying to build an apartment, he ought to own part of the house, yes? The cost of the handicapped-accessible rooms, if handled property, might turn into medical deductions, which may offset the profits from the sale of the lot. Besides, If he's on title to the house, someday, when he dies, your home would get a stepped-up basis. But there are medicare and other issues to also take into account. Many things will be intertwined in your decisions - so bring a good tax professional in at this time. Take good care of him. He's the only dad you've got. Best wishes, Eva Rosenberg Your TaxMama

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