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Dear Allen
I hope yo are well?
I have a new question for you idf I may. I have a property that was purvhased under my name for my mother. Actually she paid for the purchase and she was the person living in the property. The property was purchased for about $504,000 under solely my name at the time. In June of this year, we added her name in at the value of $760,000 and recently, she is planning to sell tis property.
My questions are:
· Since the title has both names, how do I assign for the capital gain for income tax purposes?
· Since she is selling to buy a new property, I know she would not need to pay taxesas it’s her primary property, but with the cercumstances, can I use a
The problem is that both of your names are on the property, but your mom is the one who wants to claim the principal residence exemption for the entire gain. As it is right now, this is not possible. To solve the problem, a bare trust should be created. The bare trust will specify that you are a 50% registered owner holding a 50% interest in trust for you mom, and your mom is the sole beneficial owner. By doing so, your mom will be treated as the 100% owner for income tax purposes, and she can therefore claim the principal residence exemption for the entire gain realized upon sale.