Tax Question

[Mark Gruetzmacher]

Hopefully someone can give me some helpful info.  My main concern is with the tax implications.

We just purchased a SFR, actually a Manufactured Double Wide on a Basement and 1 acre of land. The property is being purchased just in my name alone. My father is actually buying it for my sister and I to split though. The plan initially was to rent it out because the cost of the home was not too much and figured it would rent for around the 900-1000 mark. Closing is in a few weeks but now they are thinking it should just be rehabbed and then sold.

The plan was to add my sister on the title after closing since she lives 6 hrs away.  Now they think it is a better idea to rehab and sell instead of using it as a rental.  My concern is with taxes.  My understanding is that the gain could be a decent amount and as such if it is rehabbed and sold then I would have to pay taxes on the gain.  By doing so it will most likely move me up to the next tax bracket as well.  Plus then I would have to split the profit with my sister as well.  I think there is issues there as well if I was to give her x amount of money too.  How should things be structured so I can get this deal done?  I was kind of a quick decision kind of thing so nothing was thought out at least from the other parties.  I don't plan on this being a long term partner deal either.  If it was going to be a buy and hold I would consider things different. 

Suggestions...

Regards  

[Dave Toelkes]

Your sister does not have to be present at closing for you both to be named on the title. Your sister can give you a limited power of attorney to sign for her at settlement.  Talk to the settlement attorney well before the settlement date and get the limited power of attorney done ahead of time, then at settlement title will be in both your names from the beginning.