Tax issue!

[Damien Clark]

I had to purchase my primary residence with my parents credit, at the time I couldn't get approved. While I know it does not matter I paid all the closing cost, down payment, taxes and mortgage payments each month. We purchased the home in 8/2011. My wife and I are ready to sell the home and purchase a new home. We are being told that if we sell my parents will have to pay capital gains taxes (I would pay) This would really hinder our ability to purchase our next home because we need the equity for the down payment. Is there anything I can do to fix this? Could my parents refi with me on the new loan and add me to the deed? We stay in the home for two more years and be ok? Any other ideas?

[Account Closed]

Capital gains will apply if your parents are the deeded owner and did not use it as a primary residence 2 of the last 5 years. So who is the deeded owner right now?

My MIL just did the same thing last year. Only she paid cash and lent additional funds to the family member who is living in it and fixing it up. Instead of buying in the family member's name and recording a loan against it. I said it was a bad idea but my husband didn't want to push it too far (understandably). This will be a flip with some profit and the capital gains will be a shock for both her and the family member. It will use up a chunk of the profit that was supposed to benefit the family member. The whole point of the buying them the house was for them to make money on the re-sale so they could move on to something else.

I don't know any way around it except to change the ownership and start the two year clock again.

@Steven Hamilton II to see if there is another way.