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Old 02-04-2014, 01:36 PM
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Capital Gains Tax on Gifted Property

In 1985 my grandfather purchased his property for 85,000
in 2004 my grandfather gave the property to his two sons. Neither son made the property their primary residence. In fact, my grandfather continued to occupy the property.
In 2007 my grandfather died.
In 2014 I purchased the property from my uncle and father.
I paid 198,000 for the property, however my father gifted me approx 50,000of his share of the equity.

What is my uncle and father capital gains tax liability?



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Old 02-04-2014, 06:08 PM
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Originally Posted by Jeremy Caldwell Ohio View Post

What is my uncle and father capital gains tax liability?
I guess it depends;aslongas the fmv of the house in 1985 was higher than the oc of $85k, then their basis is $42.5k respectively(50% of $85K for your father);so your uncle’s LTCG is;$99K-$42.5K=$56.5K; while your father’s LTCG is $99K-$42.5K=$56.5K; your father can’t deduct the gift of $50K given to you on his return for LTCG.



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Old 02-05-2014, 10:20 AM
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More to the story of the property in question

More research has turned up more information.

My father and uncle entered into a Quit Claim Deed with my Grandfather in Feb of 2004. My Grandfather lived in the residence until his death in June 2006. At that point my Grandfathers name was officially removed from the deed in August of 2006.

Now that the house has been sold to me in 2014, what does my uncle and father use as the basis for figuring the capital gains tax?



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Old 02-05-2014, 08:52 PM
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Originally Posted by Jeremy Caldwell Ohio View Post
More research has turned up more information.

My father and uncle entered into a Quit Claim Deed with my Grandfather in Feb of 2004. My Grandfather lived in the residence until his death in June 2006. At that point my Grandfathers name was officially removed from the deed in August of 2006.

Now that the house has been sold to me in 2014, what does my uncle and father use as the basis for figuring the capital gains tax?
The IRS treats a quitclaim deed as a gift,;instead of their property’s value being reevaluated when they received it, their adjusted basis in the home is the same as the basis for their father who held the property before he filed the quitclaim deed. For example, if your GF signs a quitclaim deed on his home, which is worth $300k on the market, but he purchased it for $55k and placed $20k in improvements on it, your adjusted basis is $75k, not $300k as if you inherited it.



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Old 02-06-2014, 09:23 AM
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Hopefully Final Question

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Originally Posted by Wnhough View Post
The IRS treats a quitclaim deed as a gift,;instead of their property’s value being reevaluated when they received it, their adjusted basis in the home is the same as the basis for their father who held the property before he filed the quitclaim deed. For example, if your GF signs a quitclaim deed on his home, which is worth $300k on the market, but he purchased it for $55k and placed $20k in improvements on it, your adjusted basis is $75k, not $300k as if you inherited it.
What if we have a retroactive appriasel of the property from 2004? Can that be used to value the home at the time of the Quit Claim Deed?



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Old 02-06-2014, 04:06 PM
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Originally Posted by Jeremy Caldwell Ohio View Post
What if we have a retroactive appriasel of the property from 2004? Can that be used to value the home at the time of the Quit Claim Deed?
I guess the retro appraisal of the gifted pty. indicates the FMV of the pty in 1984 when your GF filed his quitclaim deed to his children.So as mentioned previously, aslongas the FMV of the gifted pty in 1984 was higher than its basis, the basis for the recipients is their father.s basis. For example, assume that Yout GF gifted the children the pty that cost $85K in 1984. Its fair market value tin 2004 was $100K. then, the children’s basis in the gifted pty is $85K( as the FMV in 2004 was higher than the basis) since that was their father’s original basis. However, if the pty had a FMV of only $75K in 2004, then the basis would be $75K as the FMV was less than the original purchase price of the pty.



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