Recasting mortgage, avoiding capital gains tax.
My wife and I recently moved back to our home state and purchased a new home in order to move my aging parents in with us to take care of them. When they sell their home they were going to give us a portion of that money to put towards the new home. We were then going to make a lump sum payment, recast the mortgage and add their name to the mortgage. My question is what would be their tax liability? For example, if they sell their home for $400,000 and give $250,000 towards the new home purchase is their tax liability going to be on the remaining $150,000? What can they do to avoid the capital gains tax, if any?
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