What will my tax obligation be on an inherited home? 6 Answers as of May 20, 2011My 80-year-old mother wants to put my name on the deed to her house, which has been paid off for quite some time. The value of the house is between $150K and $200K. Before proceeding with this, what will be my tax obligation when she passes?
Burnham & Associates | Stephanie K. Burnham
This type of transfer would be considered a lifetime gift. This year your mother's lifetime gift exclusion is in excess of $1million. Your mother would need to give at least an additional $800,000 before there would be tax assessed. Please note this is NOT income and does not need to be declared on your 1040 unless she is giving it to you in exchange for services you have provided.
Answer Applies to: New Hampshire
Theodore W. Robinson, P.C. | Theodore W. Robinson
There should be gift tax paid by your mother and that should be it. But you should speak to a tax accountant about it too. However, there are ways around the taxes by using estate planning procedures which an estate lawyer will know about and advise you. Good luck.
Answer Applies to: New York
Apple Law Firm PLLC | David Goldman
It depends on where you live and what the tax laws are at the time she dies. In addition, it can make a difference how she adds your name. Often the best way (but not always) is to use an enhanced life estate deed so you get a stepped up basis. You should discuss the specifics with an attorney and CPA who can advise you on your specific circumstances.
Answer Applies to: Florida
Law Offices of Brian Chew | Brian Chew
In general, you do not want to be gifted a home that has gone up in value since your parents bought it. If they do give it to you and you sell it at a later date, you will pay capital gains tax on the difference between what you sell it for and what your parents paid for it. If you inherit the property through a will (subject to probate) or better yet a living trust (no probate), your basis (what the IRS considered you paid for the property) in the property will be whatever the property is worth when you Mom passes and thus if you sell it, you will owe little if any capital gain tax (unless the property goes up in value after your Mom passes).
Answer Applies to: California
The Schreiber Law Firm | Jeffrey D. Schreiber
Generally, if you do it now, then when the house is sold, you will pay taxes on the difference between what she bought it for and what you sell it for. If instead you received it by a will or trust when she dies, when you sell the house, you would pay taxes on the difference between what the value was at her death and what you sell it for. For example: She deeds it now. House bought for $50,000. Sells for $200,000 at after her death. Tax payable is on $150,000. If passes at her death, if house is worth $200,000 and house is sold for $200,000, tax is zero. This is what is known as "stepped up basis".
Answer Applies to: California