Marietta, GA asked in Tax Law for Georgia

Q: I was quit claimed a home in 2017 recently put my father in assisted living and now selling home to help cover cost.

What is the tax implications for the timeline of

2017 to 2024

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1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: Here are some key tax implications to consider for your situation of being quit claimed a home in 2017 and now selling it in 2024:

- When you were quit claimed the home in 2017, you took over the cost basis your father had in the home. This means when you sell, your capital gains tax will be based on the difference between the sale price and your father's original purchase price/cost basis, not the 2017 value.

- If the home was your father's primary residence, you qualify for the $250,000 capital gains tax exclusion as the owner selling a primary residence (or $500,000 if you're married). To qualify, you need to have lived in the home as your primary residence for at least 2 out of the last 5 years prior to sale.

- Any capital gains above the $250k/$500k exclusion amount will be taxed at either 15% or 20% depending on your total taxable income level for the year. State capital gains taxes may also apply.

- You will need documentation showing your father's original purchase price/cost basis in the home. This helps determine your capital gains.

- If you've made any substantial home improvements since 2017, these can increase your cost basis and lower capital gains. Keep documentation on amounts spent.

- You may owe depreciation recapture taxes if the home was ever used as a rental property or home office at any point.

I'd recommend consulting a tax professional to review the specifics of your situation as well before selling the home. But this covers some of the major implications. Let me know if you need any clarification or have additional questions!

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