Unlocking Tax Savings: How AI Legalese Decoder Can Help Navigate Complex Ownership Issues When Selling a Parent’s Home
- June 10, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Selling Our Parent’s Home and Profit Distribution
My siblings and I are in the process of selling our parent’s home and will be dividing the profits equally among us. The situation is complicated because our parents are not listed as owners on the deed; instead, two of my siblings are the owners. This arrangement was made by our parents before they passed away many years ago.
If the home is sold as is, the two siblings listed on the deed would receive the profits and be subject to long-term capital gains taxes. However, since we have agreed to split the profits evenly, when they distribute our shares to the rest of us, there is a concern about potential double taxation on the profits.
## How AI Legalese Decoder Can Help
In this situation, using AI Legalese Decoder can be immensely helpful. This cutting-edge technology can analyze legal jargon and provide easy-to-understand explanations and recommendations. AI Legalese Decoder can assist in deciphering complex tax laws and regulations related to property sales and profit distribution.
To avoid potential double taxation and minimize tax liabilities, exploring options such as re-titling the home or establishing a trust could be beneficial. Consulting with a tax professional is advisable, but leveraging AI Legalese Decoder can provide initial guidance on the best course of action to optimize tax efficiency in this scenario.
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AI Legalese Decoder: Simplifying Legal Jargon
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If the proceeds gifted to each sibling exceeds $18K (for 2024), the gifter will need to notify the IRS on their tax return. But they won’t necessarily pay a gift tax on it if they’re under the lifetime gift limit of $12.92M. Definitely consult a tax professional though.
Like MrHydeUK said, look into “gift tax”, “long-term Capital gains”, “step-up basis”, and I think there is something in tax law where if this is your primary residence… you might be able to rollover the capital gains into a new home mortgage?
This is definitely an odd-ish scenario and worth consulting a professional.
There are capital gains exemptions for selling a home up to a certain amount, have to own it over a year – [https://www.bankrate.com/real-estate/capital-gains-tax-on-real-estate/#what-is](https://www.bankrate.com/real-estate/capital-gains-tax-on-real-estate/#what-is)
And there are rules for inheritance of assets and capital gains – [https://smartasset.com/taxes/capital-gains-on-inherited-property](https://smartasset.com/taxes/capital-gains-on-inherited-property)
Note, we got screwed when my son inherited bonds from my grandfather, we did not declare the values on my grandfather’s final taxes when he died, otherwise all the accrued interest would not have been taxed. Instead my son got taxed on all the interest earned. If your siblings did not mark the property inheritance properly they may get additional value charged against them. As always, consult a tax professional.