Posted on: 14th Jan, 2009 03:22 pm
hi,
my parents had a life estate drawn up in 1991...all 7 of us have ownership of their house...our names are all on the warrenty deed..dad died in 1996..the lawyer told us that he needed to make a change to keep a nursing home from getting the property...so he terminated the life estate & had us all sign a quit claim deed with our mother in 2000...mom died in 2007. the house gets sold for $20,000 under the assested value to a nephew...now the lawyer says the only part that can't be taxed is the original price of the house, improvements & the final legal fees...does that sound right to you? i thought the house was ours as an inheritance..that's why we sold the house for $70,000 to be split 7 ways at $10.000 each, tax free...i talked to a cpa & he feels it should be treated as an inheritance...i'm confused....
my parents had a life estate drawn up in 1991...all 7 of us have ownership of their house...our names are all on the warrenty deed..dad died in 1996..the lawyer told us that he needed to make a change to keep a nursing home from getting the property...so he terminated the life estate & had us all sign a quit claim deed with our mother in 2000...mom died in 2007. the house gets sold for $20,000 under the assested value to a nephew...now the lawyer says the only part that can't be taxed is the original price of the house, improvements & the final legal fees...does that sound right to you? i thought the house was ours as an inheritance..that's why we sold the house for $70,000 to be split 7 ways at $10.000 each, tax free...i talked to a cpa & he feels it should be treated as an inheritance...i'm confused....
Hi Joleen,
I think the lawyer who told you that the only part that can't be taxed is the original price of the house, improvements & the final legal fees is right. This is because as you and your siblings sold the property, you will be incurring the capital gains tax. You will have to pay the tax on the profit that you earn from the sale of the property. To know how to calculate capital gains tax, check out the given link:
http://www.mortgagefit.com/quitclaim/reversedeed-cancelprofit.html#47975
Thanks
I think the lawyer who told you that the only part that can't be taxed is the original price of the house, improvements & the final legal fees is right. This is because as you and your siblings sold the property, you will be incurring the capital gains tax. You will have to pay the tax on the profit that you earn from the sale of the property. To know how to calculate capital gains tax, check out the given link:
http://www.mortgagefit.com/quitclaim/reversedeed-cancelprofit.html#47975
Thanks