Can we switch homes with our daughter. Put our names on each others title then refinance.
2 attorney answers
You would have an income and/or gift tax issue depending on the exact terms of the transaction. If you each pay fair market value of the property to each other then that is potentially taxable income. Although there is a significant exclusion for proceeds from the sale of a personal residence. If either party does not pay fair market value for the property they receive, the other party will have made a gift to them, likely requiring a gift tax return. I doubt there would be any gift tax due, but it depends on your situation. I would recommend a consultation with an estate planning attorney to help structure this transaction in a way that meets your needs.
The above is not legal advice and does not create an attorney-client relationship. Please seek local counsel.
Great question. An exchange is a taxable transaction. A double sale. Both parties recognize gain or loss depending on whether the property has increased in value since you bought it. Since both parties are using the real estate as their primary residences, it is possible that both parties can claim the income exclusion upon the sale of a primary residence under IRC Section 121.
Check and see if both your daughter and you qualify for the income exclusion. If so, Section 121 excludes $250,000 of gain for your daughter and $500,000 of gain for you and your wife.
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