Diogenes, there are a lot of potential issues that could possibly arise on the short description of the facts that you posted in the original post ("OP"), and the question that you've asked is incredibly broad and open-ended ("What are the tax consequences I should be aware of?"). You are basically asking for a holistic assessment of your entire tax situation, which will depend not only on the facts (which are mostly not disclosed) but also perhaps on your goals for the future. As much as I wish we could help with that, it's just not something we can help with in the context of this forum. You really need to retain some form of competent professional to help you. Although I cannot and will not comment on your specific situation, I will address one proposition below simply to illustrate that the issues are potentially complicated and warrant the retention of professional help. The issue I discuss below is certainly not the only issue that warrants discussion and analysis.
What you sell it for minus fees minus buying/improving costs will be the capital gain on the property. 75% of this will belong to you and 25% to your mother.
This could be correct, but maybe not. There isn't enough information in the OP to draw an unqualified conclusion like that. The first thing to understand is that the Internal Revenue Code ("IRC") does not contain a property law code. Property law is governed by state law. Before applying the IRC, one would first need to analyse the property rights that exist under applicable state law.
Burnet v. Harmel, 287 US 103, 110 (1932) ("The state law creates legal interests but the federal statute determines when and how they shall be taxed."). I comment on Oklahoma law below.
Under Oklahoma law, the default form of ownership when a property is owned by more than one person is ownership as tenants-in-common. True joint ownership is only possible if the instrument conveying the title (e.g. a deed) "expressly declare[
s]" the ownership to be "a joint tenancy".
60 OC § 6074. An instrument that is insufficiently "express[]" in that regard will not create a joint tenancy.
Id. Frequently, people who haven't studied the law do not realise that there are various ways that a property can be owned by more than one person. Just because the OP says the property is "jointly held" doesn't necessarily mean that is actually the case. A competent professional would want to analyse this question based on all of the facts before proceeding further.
In an actual joint tenancy, the joint owners do not have separate interests in the property, but rather they each "have one and the same interest ... held by one and the same undivided possession".
Shackelton v. Sherrard, 385 P 2d 898, 901 (OK Supreme Court 1963). The sale of such an object doesn't necessarily have an intuitively obvious federal tax treatment or apportionment because it's not the case that each owner is realising a capital gain on their individual share. Rather, they are each realising a capital gain on the entire undivided title. However, the Tax Court has crafted a fair rule to handle this situation: when a property held as joint tenants is sold, a single set of capital gains is apportioned based on who is entitled to the proceeds of the sale under state law.
Finney v. Comissioner, TC Memo 1976-329, 1976 Tax Ct Memo LEXIS 72 at *7, appeal dismissed without published opinion (DC Cir Nov 2, 1977).
In Oklahoma, the general rule is that the joint tenants would be each entitled to an equal share in the sale proceeds, and hence the capital gains would also be apportioned equally.
Shackelton, 385 P 2d at 901. However, this rule is subject to an exception: "if there is proof of some special agreement between [the owners] at variance with the legal presumption of [equal division of the sale proceeds]", then that agreement controls.
Id. The OP does not contain enough information to speculate about whether this exception might apply (or whether the property is even actually held jointly).
I stress again that I offer no comment on the specific situation of the original poster. My only intent in this post is to get across the message that there are some issues here that warrant an analysis based on all of the facts, and that is just not possible to do in the context of this forum.
