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January 18, 2024

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Tax Consequences of Buying Your Parents’ House

Tax Consequences of Buying Your Parents’ House When one is buying a property from their parents, they need to take into consideration the tax consequences that come with it. Whether buying in cash or through mortgage payments, taxes may still be due on this kind of property transaction. According to if the sale price is below fair market value and other factors like capital gains tax implications, there could be significant costs that must be paid for the offer to be in properly. For instance, gift taxes could become involved if there clearly was proof of parents giving money towards closing costs rather than gifting them when selling their property at significantly less than its full market value. Thusly, gaining information about IRS regulations regarding these types of purchases will ensure all parties are safeguarded against prospective issues linked to taxation further down-the-road. Minimizing Capital Gains Tax through Gift Tax Exclusions Minimizing capital gains taxes through gift tax exclusions is a great 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 end up in fewer taxes owed as it pertains […] read more
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