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Updated almost 6 years ago,
Somewhat convoluted sale of main home "tax-free" question
A home was purchased in my parent's name a few years back in 2015. I have been the one living and paying on the house since that time and may end up selling it this year. There will be a gain from the sale. The problem with selling now is that I have not technically "owned" the home according to property records.
They could transfer it to me at any time as the house is paid off, but in case they would be the ones instead of me to be able to claim any tax-free capital gains, we are hesitant on doing so.
Adding to the complication is the fact that I have claimed depreciation on my tax returns because I rent out 1/3rd of the property. I assume if we did leave things as is and we sold the house while still in their name that it wouldn't make sense to add depreciation recapture on their tax returns (even though it would be favorable to the IRS since they're in a higher bracket, I'm sure this wouldn't be acceptable). This is the main thing preventing me from just leaving it in their names and selling it that way since I don't think they'd be able to report the recaptured depreciation as I was the one who reported the depreciation on my returns.
Any advice appreciated.