A friend of mine was put on title of a rental condo as a gift about 5 years ago. Her dad & brother each put 50k in and financed the other 100k, and put her and her brother as co-owners on the title. Her brother took care of it, rented it, etc. They then decided to give her a share of its worth to help her pay down her primary residence. Her brother simply gave her the 50k he originally put in and took her off the title, after being given advice that she wouldn't be taxed because she didn't 'make' any money over the 5 years on the property. Is this at all right? I advised her to consult her own RE tax attorney but was curious what you all thought. Thanks!
@Tatyana Blankenship When she was put on title, whoever gave up a share in the interest of the property should have filed a gift tax return. If the share of the interest she was gifted is worth exactly $50k, then she likely won't owe taxes for being removed from the title. I say "likely" because there simply isn't enough information to 100% affirm which way this will go.
Her being removed from the title in exchange for compensation can pose issues as it can be classified as a sale. She may be taxed on any profit over her initial basis (the gifted interest) in the property.
The whole family should hire a new tax advisor.
Thank you Brandon!
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