If you sell your house to your mom for $250K who then sells her house for $500K which has a basis of $50K does she have to pay tax on capital gains?Does the order matter?

[Just-Lisa-Now- · Accepted solution]

"Re: If you sell your house to your mom for $250K who then sells her house for $500K which has a basis of $50K does she have to pay tax on capital gains?Does the order matter?"

Are we talkng about 2 different houses in this scenario?

If mom sells her house for 500K and her basis is only 50K, if she qualifies for the 250k exclusion, she will pay capital gains on 200k in profit.

You selling your house to her, assuming you qualify for the 250K exclusion, you wouldnt have any capital gains to pay on your sale.

[George4Tacks]

Hi there,

You’ve come to an Intuit site supporting tax professionals, and you may be looking for support as an individual taxpayer. Please visit the TurboTax Help site for support.

Cheers!

P.S. In this case order does not matter, but be very careful about what is trying to be accomplished. Seek some professional help before Mom gets her mammary gland stuck in a wringer. 

[qbteachmt]

Mom doesn't have a basis of $50k if you sold it to her for $250k. The house doesn't have Basis. People have Basis.

[Just-Lisa-Now-]

Im thinking there are 2 different houses involved...mom's house that she paid 50k for, and the sons house that he wants to sell to mom.....but maybe Im wrong.

[qbteachmt]

Ah, a chain of events. Do you think this is yet another person trying to meet the non-existent requirement of reinvesting your residence's proceeds into the next residence purchase? You know...another rule that hasn't applied for a generation? In other words: the sequence does not matter, because there is no rule like this.

[Taxes-by-Rocky]

I was thinking that too.  But I couldn't really tell from the question.

I was even thinking of replying with a comment on Section 1031 transactions and the related party rules, but then I caught myself.  Thanks for helping to set me straight. 🙂

I'm starting to like this new message board think.  I thought they shut me off.

P.S.  Sorry for hijacking your reply!