Ok here’s my situation. 2 years ago me and my father jointly bought a house for me to live the rest of my college years in. We both put 10K down at closing, but unfortunatly our crappy mortgage company told us last minute that my name wouldn’t be on the mortgage, and hence wasn’t going on the deed. So my name does not appear anywhere on official records as having an interest in the property. Or that it is my primary residence.
I know after 2 years of living in a primary residence, upon sale you don’t have to pay any taxes. Well, I’m not on record as this being my primary residence and me owning 50%. Can I still not pay taxes on my half of the gain? I can show proof of my contribution at closing, as well as proof of my living there for the past 2 years (utility bills). Does anyone know if this is possible? There is quite a substantial gain and even at 15% capital gains tax that’s about 10K in taxes!
I think there are a couple of separate issues.
Your dad can put you on title at any time with a grant deed. Any escrow office can help you there.
How did your dad finance your house? As a second home or a rental? How has he claimed the house on his tax returns the last 2 years? Have you been paying rent to him while living there?
fyi- As far as I know the capital gains exemption can be passed to anyone, so if you can prove that youve lived there the past 2 years you should be able to get the cap gains exemption even without having any evidence that you have an ownership interest.
Im not a tax professional, you definitely should get some professional advice.
Your information is wrong. The capital gains exclusion on the sale of a primary residence requires two years of occupancy AND two years of ownership in the five years prior to the sale.
The capital gains exclusion is not transferrable.
Badfish,
Your primary residence is wherever you live most of the year. Even if you are a renter, you have a primary residence. Your mailing address, the address on your driver’s license, the address you put on your prior year’s tax returns, the address you used to register to vote are all evidence that the place where you reside is your primary residence.
We owned the house for exactly 2 years, so There would have been no time to put me on the deed and make the 2 year ownership requirement.
My father originally financed it as a second home, first year he paid taxes/saved taxes as a second home, then the second year claimed it as an investment property.
I have not been paying rent to him. but rather paying the mortgage online in his name out of my account.