young single couple, wedding plans for March, each owns SFR,
can she sell her house to fiancé, he uses it as a rental, new higher
cost basis, couple marries and lives in his, rents our her former.
ISs there an arms length law which prohibits this.
Advice and comments please.
She should just sell her house before the wedding. Since it is her personal residency, she will qualify for IRC 121 which means that she, as a single person, can make $250,000 profit TAX FREE when she sells her personal residency.
Selling a rental property includes a 15-20% capital gains tax, re-capture of depreciation AND possible an extra 3.8% extra tax depending on the income bracket… ie, the government gets a big chunk of the profit.