Purchase price on the DEED.?

Question

If I am buying into a property 35% of ... and my father in law owns the other 65% currently. His sister is selling me her share. On the new deed showing me as 35% owner, they put as a selling price of $1. Is this going to affect me with capital gains down the road? Should it say what i am purchasing it for? The correct amount? $$$

Would I pay capital gains on the investment of my 35%. (down the road) If i pay $45000 for the 35% of the property, and its deeded as $1 sale - County state Transfer tax exempt, due to family. What haapens in 4 or 5 yrs if we sell. Will my 35% initial investment amount be taxed, or will it be anything over and above the $45,000

Answer 1

Yes, the proper sale price should be shown on the deed. Sounds to me like someone is attempting to avoid the common real estate transfer tax by claiming a lesser value.

This could come back to haunt you. I would request that the proper sales value be stated on the deed in question.

Answer 2

It will not affect your capital gains.

It is not required to state the actual amount in most states.

However, what IS required in states that tax real estate transactions (which is most if not all of them) is that you disclose to the Land Records the true price, and pay the appropriate tax.

You will need to substantiate your purchase price ("basis") when you sell, so keep the record of the transaction. The Settlement Statement, or canceled check for a cash deal, or the Conveyance Tax form are all reasonable proof of the original price.

Answer 3

Different states have different rules as to disclosures of sales information some states are what is called non disclosure states which do not require such disclosure excepting that some of them must disclose to the assessor's office the entire financial transaction for taxing purposes. The closing company is obligated by law to report the transaction to the IRS so that they have a record of what you did.
None disclosure states are
Alaska, Idaho, Kansas, Louisiana, Mississippi, some counties in Missouri, Montana, New Mexico, North Dakota, Texas, Utah & Wyoming.
Best of luck to you

Answer 4

In my state/county, you do not put the correct sales amount....that's shown on the excise tax affidavit. I'm willing to bet your deed says, "$1 and/or other valuable consideration"...which means its not actually $1.

Don't worry...if you did this through a title company, they know the laws, or they will get put out of business very quickly.

Answer 5

Can a RE look at my question and offer advice? I'd appreciate it!