What will my tax obligation be on an inherited home? How? 16 Answers as of September 21, 2015

My 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?

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Law Office of Pamela Braynon | Pamela Y. Braynon
If the house becomes your homestead(your primary place of residing), there should be no obligation. Other than that you would have to pay the property taxes on the property as ascertained by the county in which the property is in.
Answer Applies to: Florida
Replied: 9/21/2015
Mankus & Marchan, LTD
Mankus & Marchan, LTD | Tony Mankus
If you inherit the home after your mother dies, there is no income tax to you.
Answer Applies to: Illinois
Replied: 9/17/2015
Christine Sabio Socrates Attorney at Law | Christine Socrates
If the value of the home has increased since your grandmother purchased the home, it may be wise to keep it in her name and file a affidavit of transfer on death instead. It would keep it in her name and transfer to you automatically on her death. If your grandmother holds the home until her death, you will receive the stepped up basis to the value on her date of death so when you later sell the home, you can use that value as your basis. There will be no tax obligation until you sell the home after you inherit it.
Answer Applies to: Ohio
Replied: 9/16/2015
Wellerstein Law Group, P.C.
Wellerstein Law Group, P.C. | Elisha Wellerstein
When you sell the house you will have to pay capital gains on the difference between her cost basis and the selling price. You might be eligible for the capital gains exemptions on a primary residence.
Answer Applies to: New York
Replied: 9/16/2015
Law Offices of George H. Shers | George H. Shers
If she puts your name on the deed now, they ownership to that portion has already been transferred to you. If she makes it a gift, then their is no tax consequence to you. But you also take it with the same tax basis as she has. If you wait until she dies and you inherit the property, you have to do through probate [but probably a simple one you can handle yourself if that is her only major asset] but the property takes the stepped up basis of its fair market value on the date of her death. If you are going to live there for several years and you are in California with its $250,000 exclusion on capital gains tax on your primary residence, it may not really matter to you. There are other possible legal factors to consider [is she getting any Social Security disability benefits, Medicare, etc.], other potential heirs, liens, etc. so it is worthwhile to spend several hundred to consult with an estate attorney to see what can be done and the consequences. Also, you want to protect her interests; what if you are married, she transfers the house to you, you take it as community property, and your wife hates her and demands you kick her out of the house [happens a lot].
Answer Applies to: California
Replied: 9/16/2015
    Goldsmith & Guymon
    Goldsmith & Guymon | Dara Goldsmith
    The issue is what is her basis. Speak with a CPA. You may be better off taking it as an inheritance with a step up in basis. This is opinion is solely based upon the facts presented in the inquiry. Additional facts may be important and may change the analysis. If you are uncertain, seek legal counsel. We are not your attorneys. This answer is being offered to assist you in determining if you need to retain legal counsel to assist you, not to resolve your issue through an email inquiry.
    Answer Applies to: Nevada
    Replied: 9/15/2015
    Ronald K. Nims LLC | Ronald K. Nims
    In general, there is no tax obligations on receiving a gift. However, if you ever will sell the house it's better for your mother to change the deed so you inherit the house at her death.
    Answer Applies to: Ohio
    Replied: 9/15/2015
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    If the house is deeded to you by her prior to her death, if you sold the house the day after she died, your tax liability can be based on the amount of the difference between what she bought the house for and its current market value. This is because you take her tax basis, usually what the house was purchased for originally. If the house is given to you as part of a will or trust, if you sold the house the day after she died, your tax liability would be zero. This is because your tax basis is the value of the house at the date of death. Have a will or trust done and have the house gifted to you at her death. The cost of the will or trust document pales in comparison to the potential tax liability of transferring the house now.
    Answer Applies to: California
    Replied: 9/14/2015
    Law Ofices of Edwin K. Niles | Edwin K. Niles
    California no longer has an inheritance tax. There is an issue regarding the tax basis for capital gains tax purposes. You should have a talk with an estate lawyer.
    Answer Applies to: California
    Replied: 9/14/2015
    Geoff Germane, Attorney at Law | Geoff Germane
    Putting your name on the deed causes a gift to occur, and since the value of the gift (an interest in the home) will be worth more than 14k, a gift tax return (Form 709) is required to be filed. No gift taxes will be due since as long as your mother has not used up her lifetime gift applicable exclusion (currently $5.43MM). It will likely be preferable to you to have Mom transfer the home into a revocable trust and make you the beneficiary of the home after she passes. No capital gains tax or gift tax for you.
    Answer Applies to: Utah
    Replied: 9/14/2015
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    Quickly see an attorney before she changes her mind or passes.
    Answer Applies to: Michigan
    Replied: 9/14/2015
    Ashcraft & Ashcraft, Ltd.
    Ashcraft & Ashcraft, Ltd. | Randall C. Romei
    If you receive the real property as a gift before your grandmother passes your basis in the property will be the basis your grandmother had in the property. If she held the property for a long time the basis may be very low. If you receive the property in a distribution from her Will or Trust after your grandmother dies, then your basis in the property will be the value at your grandmother's date of death (or the value at the elected alternate date 6 months later). When you sell the property you will be taxed on the capital gain which would be the difference between the basis in the property and the sale price, after costs of sale. It is likely that the capital gain, and thus the capital gain tax will be higher if you receive the real property in a gift before death as opposed to from her estate or trust after her death. There are other factors that can affect basis in property. You should consult with an attorney or accountant about such matters.
    Answer Applies to: Illinois
    Replied: 9/14/2015
    Minor, Bandonis and Haggerty, P.C.
    Minor, Bandonis and Haggerty, P.C. | Brian Haggerty
    Your mother should discuss this proposed transfer with her estate planning lawyer. (None should have one, honest). If she goes forward with this, she will need to file a gift tax return on the transfer probably there will be no tax, but that depends on circumstances. The tax effect to you is that if you inherit the house, on her passing, you get a "stepped up" basis your tax "cost" for the home is the fair market value on the date of your mother's death. However, if she gives you a half interest, then your tax cost on the half given to you is her basis her cost when she bought the home. Basically, if you inherit the home then all the capital gain on the property is forgiven, up to the time of her passing. There are many other options, which should be discussed with a lawyer. Getting your mom's estate plan right is well worth a few hundred dollars of lawyer fees to do the planning.
    Answer Applies to: Oregon
    Replied: 9/14/2015
    Polsinelli Shughart PC | William B. Prugh
    There may be a gift if she transfers the house at this time. If she uses a transfer/pay on death deed, the transfer takes place at her death. That may be subject to estate taxes. In each case, there is a large exemption available which may avoid taxes. Consult a tax professional for advice, a 1-hour conference should answer all your questions, including whether her estate plan is in order with respect to all her assets & property.
    Answer Applies to: Missouri
    Replied: 9/14/2015
    Patrick W. Currin, Attorney at Law | Patrick Currin
    Depends on purchase price; if you take after death you give FMV as basis. That's a better course.
    Answer Applies to: California
    Replied: 9/14/2015
    Vandervoort, Christ & Fisher, P.C. | James E. Reed
    There will be no income or inheritance taxes to pay, assuming your mother does not have an additional $5,000,000 or so in other assets.
    Answer Applies to: Michigan
    Replied: 9/14/2015
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