Originally Posted by
Han Solo
Slightly off topic but the money gurus seem to be here in force. Selling a piece of inherited investment property that is in mine, my mother's, and sister's names. Are we required to split the proceeds equally or can we distribute the profits in any way we choose without any other tax implications other than the capital gains we'll have to pay on the profit?
How is the property titled and how long ago was it inherited?
If all 3 are on the title then you may have an issue splitting it up other than 1/3’s. It would essentially be as if you were gifting some of those proceeds to the one taking the largest %.
Depending on the value you’re talking about though, it might be achievable. You can gift up to $14k to/from an individual per tax year. For example, you could sell the place and then you and your wife could each give $14k of proceeds to your sister and her husband, for a total of $56k in 2018. If it’s a big amount you could “give” another $56k in 2019 without incurring a tax liability for anyone.
I ask about how long ago it was inherited, because typically there is a step up in basis on death, meaning if you sell soon after it is inherited there should be little to no capital gains.
All of this is just from past family experience and I’m not a tax lawyer or accountant, so DYODD. It does sound though like you have some options available to get creative with what you’re trying to accomplish.