however, he owned a house that I paid for, two questions
1.- The house was sold within two years of ownership (limitation for profit on a house) he did not buy another property, does he have to pay taxes on that money? If so, sonce he does not file tax returns, how would he?
2.- Sine I paid for the house what happens to the interest paid on that house, who can claim it? He doesn't file taxes and my name is not on the mortgage?
2007-01-26 10:00:25 · 5 answers · asked by Mick R 2 in Business & Finance ➔ Taxes ➔ United States
There are a lot of issues that come to my mind which generate more questions than answers.
For instance, you say you paid for the house. And then you ask what happens to the interest paid on the house and you say your name is not on the mortgage.
Is his name on the mortgage?
If you were making payments on a mortgage for property someone else "owns", even if it is your father-in-law, those payments constitute a gift to him, and you could have gift tax consequences.
2007-01-26 10:11:50 · answer #1 · answered by T G 2 · 0⤊ 0⤋
Maybe he doesn't usually file taxes, but if there was enough gain on this house sale, then he would have to file for the year it was sold, showing all of his income for that year. It doesn't sound like the sale qualifies for the exclusion of gain from taxes, since it was owned less that two years.
If the loan was in his name, and you actually paid it, nobody would get the interest deduction for years when he didn't owe taxes. And unless his itemized deductions for the year of the house sale are higher than the standard deduction for his filing status, nobody would get it that year either even though he files. You can't take it if you're not on the loan - paying it might make you a nice person, but doesn't help your taxes.
2007-01-26 10:10:54 · answer #2 · answered by Judy 7 · 0⤊ 1⤋
1) If the house was his personal residence, there is no tax on the gain within certain limitations.
2) You don't say who is holding the mortgage, but if your Father in Law is, he should be claiming the interest as income and you can deduct it.
2007-01-26 10:05:48 · answer #3 · answered by crazydave 7 · 0⤊ 2⤋
If your father sold his house and didn't buy a new one, the money is classified as income. and if it brings him over the minimum then he will have to file a return.
If you are not on the morgage, I don't think you can claim anything.
2007-01-26 10:23:47 · answer #4 · answered by Winnipeg76 3 · 0⤊ 1⤋
Assuming you did not live in the house, then the gain is 100% taxable income. *****
Only your personal residence is in the exemption rule.
BE CAREFUL
2007-01-26 10:09:54 · answer #5 · answered by WealthBuilder 4 · 0⤊ 1⤋