Expert: Dick Dennis - 6/28/2006

Question
Hi Dick -
My sister and I jointly own a house and 6 acres.  We both want to sell this property in a couple years.  She wants to build a house on 3 of the acres and live there for a year or so, prior to sale.  Question is:  this seems messy, so do we subdivide it now?  Does she need to compensate me for the 3 acres?  When we sell the 6 acres and 2 homes, what percentage goes to each of us?  Any advice would be so appreciated.
Thanks

Answer
My suggestion would be to first split the land, three for each of you. Check with the county planners how you may do it, and IF you can do it.

If you are able to split it, it will cost some for a surveyor, etc., then you can keep your three acres or sell it and your sister can do the same.

If you don't split it, then when she sells her house on her portion of the land, you should compensate her for the improvement in value to the land when she builds the house. Now you can see why I said that you should first split it.

One more thing: If she is going to live on the property, then she should do so for two years so that she doesn't have to pay capital gains to the IRS. If she lives less than two years, then she WILL have to pay capital gains to the IRS. She should check with her favorite tax expert.

I do wish you well.

Dick Dennis             dixiedee13@aol.com

www.OldProblemSolver.com