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House Calls: Judgment Problem

Edith Lank on

Answer: Yes, you're all correct. I was quoting federal rules. I should have realized that individual states can set their own look back periods where Medicaid eligibility is concerned. In almost all states it is indeed now five years.

House Was a Gift

Dear Edith: In 1997 my parents signed their home over to me and my two siblings. We just sold the house. Is there capital gains tax to be paid, and would it be based on the assessed value of the home at time of transfer in 1997? Any more information would be appreciated. -- R. G.

Answer: When you received the house as a gift, you also took over your folks' cost basis for the property. You can add to that anything you or your siblings have spent on permanent improvements (but not repairs) since 1997.

Yes, capital gains tax is due on any profit.

It's a good idea to have professional help with your tax return for the year in which you sell a house.

 

Did It Himself

Ms. Lank: I read with interest J.D.'s letter about turning his single-unit home back into a duplex.

I was in that same situation 10 years ago. Rather than hiring a lawyer, I went first to the zoning board, and, of course, I was turned down based on the neighbors not wanting a duplex.

I then went to the library and found that the city directory never listed it as a single-family home, so I made copies of the directory from the first year I found to the last one.

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