Expert Advice When You Need It Most

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

Asked over 3 years ago - Rochester, MI

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....??

Flag

Save

Share with:

Attorney answers (2)

Kent Anderson

Reputation Level 9

Answered over 3 years ago. Bankruptcy Attorney in Eugene, OR.

Flag

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.

Mark as good answer

1 person marked this answer as good

Add comment

John M. Kaman

Reputation Level 20

Answered over 3 years ago. Criminal Defense Attorney in San Francisco, CA.

Flag

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.

www.kamanlaw.com

Mark as good answer

Add comment