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January 18, 2024

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Tax Consequences of Buying Your Parents’ House

Tax Consequences of Buying Your Parents’ House When one is buying a house from their parents, they should take into consideration the tax consequences that include it. Whether buying in cash or through mortgage payments, taxes can always be due on this type of real estate transaction. Based on if the sale price is less than fair market value and other factors like capital gains tax implications, there might be significant costs that need to be taken care of the deal to stay properly. As an example, gift taxes can become involved if there is proof of parents giving money towards closing costs instead of gifting them when selling their property at less than its full market value. Thusly, gaining knowledge about IRS regulations regarding these types of purchases will ensure all parties are safeguarded against prospective issues linked to taxation further down-the-road. Minimizing Capital Gains Tax through Gift Tax Exclusions Minimizing capital gains taxes through gift tax exclusions is a good tactic for reducing the overall level of taxes that have to be paid upon selling one’s parents’ home. Gift taxes derive from a person or Real Estate Rescue couple’s gifting history, and ultimately result in fewer taxes owed […] read more
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