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January 13, 2024

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Tax Consequences of Buying Your Parents’ House

Tax Consequences of Buying Your Parents’ House When one is thinking about purchasing a house from their parents, they need to take into account the tax consequences that come with 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 lower than fair market value and other factors like capital gains tax implications, there could be significant costs that need to be paid for the offer to settle properly. For instance, gift taxes can become involved if there clearly was proof parents giving money towards closing costs in place of gifting them when selling their property at less than its full market value. Thusly, gaining understanding of IRS regulations regarding these kinds of purchases will ensure all parties are safeguarded against prospective issues related 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 general amount of taxes that must be paid upon selling one’s parents’ home. Gift taxes derive from an individual or couple’s gifting history, and ultimately result in fewer taxes owed in regards […] read more
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