investing in real estate, flipping and capital gains tax, avoiding capital gains tax in state of MI

Rochester, MI Viewed 293 times. Posted about 1 year ago in Real Estate

Flipping a house - Capital gains: I just purchased a house to flip. Is it legal to do the following: put my daughter on the title and mortgage it through FHA as a primary residence for her. After 6 months, I would like to sell the property, my daughter would receive the sale profit and then give me back the money without having to pay capital gains....?? - Is this your question? Add additional information

Answers (2)

Kent Anderson

This attorney is licensed in Oregon. Posted about 1 year ago.

The $250,000 exclusion for gain from the sale of a personal residence requires that the owner hold the property and live in it for at least two years. Consequently, if there is a gain on the sale, it would be considered a short term capital gain and subject to taxation at ordinary income rates. That is not the only problem with your proposition. If you give your daughter the house, the transaction may be subject to gift tax, depending on the value of the gift. Likewise, if your daughter gives you the profit, she could be subject to gift tax on a portion of the transfer.

John M. Kaman

This attorney is licensed in California. Posted about 1 year ago.

While I can't disagree with Kent the way your question is worded sounds like you want to defraud the IRS. Using a straw person for title and hiding gains may not only stir them up but your local prosecutor. Be careful and be honest.

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