My daughter and I bought a house in Pennsylvania. She was going to move here, but she changed her mind and still lives in New York. She never became a resident of Pennsylvania. My primary residence is at a different location in Pennsylvania. We want to sell the house, which we have owned for a year and a month. How will capital gains work? Is it split between the two of us? Can I write off the expenses necessary to get the house running as well as the real estate fees and closing costs?
The gain or loss on the home will be calculated by taking the gross proceeds of the sale, minus any closing costs, including transfer taxes and other fees, minus the original purchase price, plus any of the original closing costs and any improvements made to the home during ownership. That gain or loss will be split between the two of you, each of you picking up 50 percent of the gain or the loss on your own return.
You cannot deduct the operating costs of the home, but the real estate taxes, split 50-50, can be claimed as itemized deductions on your return in the year in which they are paid, assuming that itemizing will provide a larger deduction than the standard deduction.
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Answered by: Mark B. Zinman, CPA, is a managing partner with Zinman & Company in Southampton, Pa.