Dear Ilyce: My sister and I inherited joint ownership of our parents’ home. She lives there, I do not. I sold my share to her with a lawyer-prepared “quit claim deed” for the nominal price of $10. Am I liable for any taxes as the result of the sale?
You may be, but if you sold her the home for $10, and you have owned the property for at least a year, your capital gains tax is either 5 percent or 15 percent of the profit, depending on your income. On $10, that would run to 50 cents or at most $1.50. My guess is you don’t owe anything, although you probably have to report the sale. Talk to your tax advisor for details.