Background - Home purchased 40 yrs ago for 60K and rented for past 30, I assume with all of the depreciation the cost basis is zero. My dad purchased it 40 yrs ago, and when he passed away the home was given to the 5 children so we all own 20% of the property.

Home is probably worth 400K in the open market, Appraisal district has it at 300K which would be the sale price. I would like to purchase this from them and avoid as much tax.

I will get a real estate lawyer to do the paperwork. I would take out a 210K Loan so each would pay long term cap gains on 60K per sibling.

Is there anyway to avoid the capital gains tax?

Is there a process for my siblings to gift me the property, avoid taxes, and I would just gift them $$$ to stay under the yearly gift tax?

Any suggestions to decreases taxes for this transaction is what I am looking for.

I completely forgot about step up basis. Property was willed to us when my mother passed about about 6 yrs ago.

How do I determine FMV for the home 6 yrs ago vs today. Assuming it has appreciated 120K, is there any way to avoid taxes on this such as doing the gifting limit (15K) to my wife & I who would be the owners?

That would be 30K x 4 siblings = 120K?

Martin Cash said:

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ThrowAwayAccount1973 said:

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I completely forgot about step up basis. Property was willed to us when my mother passed about about 6 yrs ago.

How do I determine FMV for the home 6 yrs ago vs today. Assuming it has appreciated 120K, is there any way to avoid taxes on this such as doing the gifting limit (15K) to my wife & I who would be the owners?

That would be 30K x 4 siblings = 120K?

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Get a DeLorean, go back to 2015 and find a real estate appraiser.

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Or a hot tub works as well.

With respect to the 2015 appraisal, you're now playing a game of B.S. with the IRS. You now want to claim a high enough number that if the IRS audits you, they would ultimately accept it. Of course, if your 2015 number is too high they'll call BS on you and say you owe taxes. If its too low, well why give the government free money?

A tax accountant (and or attorney) will be able to help you set up a number that will best compromise between being aggressive versus ceding money to the government right now.

The fact its split 5 different ways is going to stop you from being too aggressive on claiming a high 2015 value. Your siblings are not going to want to all get dragged into court over this and you're aggressive gains are split 5 ways anyway.

ThrowAwayAccount1973 said:

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I completely forgot about step up basis. Property was willed to us when my mother passed about about 6 yrs ago.

How do I determine FMV for the home 6 yrs ago vs today. Assuming it has appreciated 120K, is there any way to avoid taxes on this such as doing the gifting limit (15K) to my wife & I who would be the owners?

That would be 30K x 4 siblings = 120K?

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Unless you are familiar with state, and local laws/ordinances & pertinent paperwork you would need an appraiser to give you a retrospective opinion of value, and a real estate attorney to facilitate the transfer.

I don't live or work near Texas so I can't help you there.