My uncle wants to "sell" me a Co-Op apartment in NYC for 50K (mkt value is probably about 350K). Is this possible? i get a feeling there are all sorts of barriers in the way...
2007-12-14 07:38:30 · 3 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
He can sell it to you for whatever price he chooses. But he should talk with his CPA since he is also giving you a gift of 300K and it might (but shouldn't) impact his tax liability. You should also see a CPA to find out the tax cansequences for you of this gift.
Other than possible tax consequences there are no barriers. Now if your uncle is open to the idea, it would probably be better for him to leave it to you in his trust. If he needs income you could rent it from him in the meantime and then he could leave it to you and then you get the basis of the co-op value on his date of death. Or buy it directly from him for the $350K and make your mortgage payments directly to him. If you do that, then he could leave the co-op to you in his trust and then you have the co-op and no more mortgage.That way there are no tax consequences for either of you and you receive the tax basis of the value of the property on the day you bought it. However if he "gifts" the property to you (and that is his plan for 6/7 of it) then you retain HIS basis cost on the property. (Basis is the amount he paid for the co-op). Then when you sell the co-op, you will have to pay capital gains taxes on the difference betwen the selling price and what he originally paid for the property. Much better to "rent" it now, provide him with some income, inherit it later and then you would not owe any capital gains if you decide to sell. Ask uncle to get a trust made (if he doesn't already have one) and leave the co-op to you in his trust. That way there are no probate taxes paid by his estate and you get ownership of the co-op right away when he passes.
2007-12-14 07:57:54 · answer #1 · answered by Jeanne R 7 · 0⤊ 0⤋
There should be no barriers. This transaction is really a $50,000 sale and a $300,000 gift. It should be reported that way for income tax purposes and a gift tax return shuld be filed. I suspect that many people incorrectly treat it as a sale of 100% of the property for $50,000 which would result in a lower income tax and no gift tax consequences. The exposure is all on your uncle if he does not report it correctly.
Jim Kirby, CPA
2007-12-14 17:28:28 · answer #2 · answered by Jim Kirby, CPA/PFS, CFP, CFS 3 · 0⤊ 0⤋
price is not a barrier, but in most of these places, the owner's committee has to approve of you.
2007-12-14 07:41:37 · answer #3 · answered by Anonymous · 0⤊ 0⤋