Boyfriend is buying out clients house.

[tlccpas]

In 20 years I've never had this issue. Client's boyfriend is on the deed. He is buying her out of her half of the house. California is a community property state. Would there be any tax implications? Maybe a gift? The house isn't being sold so I don't really see any tax forms being generated by this. Am I missing something? If she will somehow be taxed, it affects the purchase price of a new home she might buy, so it would be a big deal. Thanks!

[Skylane]

I'm not from a CP state but my understanding that there would have to be a marriage not just a high school ring.... is it a rental property or primary residence? 

[tlccpas]

It's a primary residence.

I wouldn't think there would be tax ramifications, but if there is, it'll affect the price of a new residence that she can afford, so I really want to make sure. She'll buy the new house before the end of the year, before any tax form would be received. A form 1099-S shouldn't be sent since it's not a sale, but I guess we're concerned about what's in the escrow papers. If it were to somehow be considered a sale, and she's owned it for about 5 years, it seems that the $250,000 capital gains exclusion would get rid of any gain/tax anyway. Am I thinking correctly?

[BobKamman]

“The house isn't being sold” – but her half IS being sold. “A form 1099-S shouldn't be sent since it's not a sale” – who made up that rule, you or the title company?

She is selling her half of the house. The fact that the buyer owns the other half, is irrelevant. At least you acknowledge there is a buyer.  A transaction with a buyer but no seller is like the sound of one hand clapping. 

However, at least one reliable source cites authority that she can claim the $250K exclusion. See

https://www.thetaxadviser.com/issues/2017/apr/tax-issues-nontraditional-households.html

[qbteachmt]

What about mortgages and escrow accounts?

Read the Deed:

John Doe and Sally Smith JTROS (joint tenants with right of survivorship)

or

John Doe and Sally Smith TIC (tenants in common)

Community Property doesn't seem to apply to this deed. Read the Deed.

JTROS means, if John dies, Sally gets all of it. If John buys out Sally, that is going to affect the Deed.

TIC means John dies, and Sally has a new property owning partner. Or, John can sell to Sally, because the property is separate halves.

[tlccpas]

Your response would have been great if you only included the last sentence and the article. Your passive-aggressive insults weren't really necessary. I was thinking out loud when obviously I shouldn't have. Thanks for your last sentence and the article.

[BobKamman]

Everyone has the opportunity to remove nonsensical thoughts before clicking on Post. Often, this will answer the question before it is asked.

[qbteachmt]

@tlccpas 

It isn't clear who you are scolding of your peers users that attempt to help others on this forum as Volunteers. However, your statement about "thinking out loud" applies to everyone here. That means this is no different than a conversation group in real life, where everyone here was trying to help think through the issue with you and not for you.

So, that comment of yours was not warranted, no matter who you directed it to.

Play nice on the internet.

[BobKamman]

Volunteer status doesn’t always provide immunity for malpractice claims. But yes, since they are being asked of volunteers, some consideration should be given to our limited free time before posting stupid questions.

[IRonMaN]

There is no such thing as a stupid question.  Well, yeah there is and we get a bunch of them everyday.  But since we are highly paid representatives of Intuit, we always try to make the customer happy and always treat every question as being a great question.  By the way, is the sarcasm font working today?

[qbteachmt]

"By the way, is the sarcasm font working today?"

No, but you should be on the Runway, 'cause you are workin' it!