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View Full Version : Tax Atty's... Question?


jAZ
12-05-2004, 12:00 PM
3 people own a house (all 3 names are on the deed). The house is sold (lets say $99K) and by contract, each person is to receive 1/3 of the proceeds of the sale (33K each).

How do you calculate the capital gains tax on that sale?

Is there a single tax rate for the sale (ie, 20% of the gain on the entire property)? In which case each person would pay 1/3 of that tax on the total gain.

Or do the proceeds flow to each individual's personal tax return to be calculated based on their own private tax rate (which in some cases could be lower than 20%).

I'm negotiating an agreement which has the following language:

“One-third of the capital gains taxes due, if any, shall be the responsibility of each co-owner. Each co-owner agrees to hold the other co-owners harmless from capital gain taxes beyond the one-third share. Distribution under this agreement may be withheld until proof of any tax due has been provided.”

jAZ
12-05-2004, 02:12 PM
kick... any one with real estate or tax knowledge?