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Old 12-11-2012, 06:24 PM
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msc40

My elderly mother quit claim deeded her property to me about 5 years ago for ten dollars.She still had a mobile home on the lot in her name.After five years she needed to move away.I sold the land and she sold the mobile home at the same time to an individual.We sold it for $18,000 and I gave her the money.Do I have to pay capital gains on the sale.She is in her seventies, so I'm assuming shes safe?



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Old 12-12-2012, 02:11 AM
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“Do I have to pay capital gains on the sale.She is in her seventies, so I'm assuming shes safe?”------------> The tax that you need to pay is the based on the capital gains obtained from the sale of the pty. The gains will be calculated as the difference of the the sale price and the value at the time of quitclaim. However, there can be tax advantages to using quitclaim deeds, particularly when the property is given as a gift. If you mother, as a grantor or donor, quitclaims a deed without taking any money for the deed, the transfer is considered a gift. If the gift, the amount the property is worth, is less than $11K for 2007, the federal per year per person gift limit, mother’d be exempt and not have to pay tax on the gift;she even didn’t have to file form 709. The transaction you're describing is a partial purchase for $10 five years ago, and partial gift (much cheaper than the FMV of th epty five years ago).Your basis is likely to be similar to the mother's basis. So, as long as the current FMV of the pty exceeds the basis of th epty five years ago, then you need to pay LTCG tax on the LTCG; in 2008–2012, the tax rate on long term capital gains is 0% for those in the 10% and 15% income tax brackets and 15% if your marginal tax rat e is 25% or higher. After 2012, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).



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