Today TaxMama hears from Maureen in California who says. “I own a house with my 2 sisters equally since 2002.
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They want to buy my share out because I am getting married. Will this amount be considered taxable since we didn’t sell the house?”
Dear Maureen,
You’re right, WE didn’t sell the house.
YOU are selling the house.
For you, there will be a taxable event.
You didn’t say whether you live in the house or it’s a rental.
If you’re living in the house, when you sell your share, $250,000 of the profit won’t be taxable to you, as your personal residence exclusion. Odds are, one third of a house will not have appreciated more than that in the last 10 years or so.
If this is a rental property, then all the profits will be taxable.
Before you and your sisters make any decisions, why don’t you sit down with a good, local tax professional and get some advice? Even when there are taxable events, there are usually ways to structure deals to reduce taxes – if the arrangements are made before the sale.
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An experienced tax pro save you a fortune in the long run.
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In fact, the tax pro can help your sisters avoid a property tax increase when you sell them your share.
And remember, you can find answers to all kinds of questions about dealing with jointly owned property and other tax issues, free. Where? Where else? At TaxMama.com
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