Q: My Mother is selling a home that I have done work on and paid the mortgage on, she is giving me about 35k. Tax concerns?
She got the loan and the home is in her name, I have paid the mortgage from the get go and did renovations on the house. She is selling the house and giving me a portion of the profit, approximately 35K. Are there any tax concerns here?
A:
Two considerations:
Mother:
Under federal tax law, the profit from the sale of a home that is not transferred into the purchase of another home within 12-18 months (usually). If not the profit is subject to capital gains tax.
Child:
This would be income, so you will have to say state and federal taxes on the profit. The capital gains classification is questionable because the renovation and sale could arguably be classified as a trade/business.
You should have an attorney or accountant look over the details of the deal.
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