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40shades-of-blue

Selling house parent to child?

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What is the best way to go about selling a house from parent to child? My Dad talked about doing this but we never did. Now he’s gone and I am honestly feeling totally lost. The house is in his and my mothers name and I live there. Shes going to be here until shes passes. My dads though was if one of them had to go into a facility for a long or permanent time then we wouldn’t lose the house if I own it. Obviously I need to go to a lawyer but I know lots of you guys on here are really smart and could give me some tips first.  
 

Thank you

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7 mins ago, 40shades-of-blue said:

What is the best way to go about selling a house from parent to child? My Dad talked about doing this but we never did. Now he’s gone and I am honestly feeling totally lost. The house is in his and my mothers name and I live there. Shes going to be here until shes passes. My dads though was if one of them had to go into a facility for a long or permanent time then we wouldn’t lose the house if I own it. Obviously I need to go to a lawyer but I know lots of you guys on here are really smart and could give me some tips first.  
 

Thank you

Speak to an Estate attorney, we had done it via a irrevocable Trust years prior to his passing 

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In my family's case we tried to get our parent's to sell one of the responsible children their condo in AZ.  Kept on getting the excuse we are fine.  Well the got sick, we moved them back to Mass and Dad made it two years and Mom went into a very good facility in our hometown.  It didn't take long for everything they had left to go to the state to pay for the nursing home.  If I recall correctly property needs to be sold to family member 7 years prior to avoid any financial complications.

Cabo

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11 mins ago, Cabo2005 said:

In my family's case we tried to get our parent's to sell one of the responsible children their condo in AZ.  Kept on getting the excuse we are fine.  Well the got sick, we moved them back to Mass and Dad made it two years and Mom went into a very good facility in our hometown.  It didn't take long for everything they had left to go to the state to pay for the nursing home.  If I recall correctly property needs to be sold to family member 7 years prior to avoid any financial complications.

Cabo

Yep, I think the trust needs to be established for 7 years, to be untouchable by a nursing home etc... 

 

again speaking to an estate attorney is your best bet

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I thought it was a 5 year lookback?

 

Any way, time to lawyer up, this is not something to get wrong.

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So it's your mom's house and you want to take over ownership?  And, you have your own home elsewhere?  If that's the case then you want to be careful, here.  Your mom can sell you her home for a buck and she can live it in for the next 100 years and pay her own way. When it comes time for you to sell this house you will get dinged with capital gains tax on the sale and stand to lose a lot of money.  There are some benefits/protections for your mother in selling her property to you now, but at the expense of capital gains taxes down the road.  Alternatively, your mom would gift the house to you as her beneficiary in her will and you don't get  taxed on the capital you stand to earn on the sale in 100 years from now.  You definitely need to talk to an accountant or someone that will give you some financial advice. 

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1 min ago, Fly By Nite said:

So it's your mom's house and you want to take over ownership?  And, you have your own home elsewhere?  If that's the case then you want to be careful, here.  Your mom can sell you her home for a buck and she can live it in for the next 100 years and pay her own way. When it comes time for you to sell this house you will get dinged with capital gains tax on the sale and stand to lose a lot of money.  There are some benefits/protections for your mother in selling her property to you now, but at the expense of capital gains taxes down the road.  Alternatively, your mom would gift the house to you as her beneficiary in her will and you don't get  taxed on the capital you stand to earn on the sale in 100 years from now.  You definitely need to talk to an accountant or someone that will give you some financial advice. 

Agree. But if she gifts to him now there prolly won't be any gift tax, and he'll get a stepped up bases to today's market value. But you're right he needs someone to do the math for him.

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19 mins ago, Fly By Nite said:

So it's your mom's house and you want to take over ownership?  And, you have your own home elsewhere?  If that's the case then you want to be careful, here.  Your mom can sell you her home for a buck and she can live it in for the next 100 years and pay her own way. When it comes time for you to sell this house you will get dinged with capital gains tax on the sale and stand to lose a lot of money.  There are some benefits/protections for your mother in selling her property to you now, but at the expense of capital gains taxes down the road.  Alternatively, your mom would gift the house to you as her beneficiary in her will and you don't get  taxed on the capital you stand to earn on the sale in 100 years from now.  You definitely need to talk to an accountant or someone that will give you some financial advice. 

It's my parents house and I still live there. We have no plans of moving. My dad died two days ago.  He was always worried that if one of the them needed some like of long term care we would eventually lose the house.  Of course we dragged out feet and now here we are.  I am just thinking ahead that if something happens to my mom now and she needs to be somewhere long term.  I recall him saying the 7 year time frame too.  Obviously I need to talk to a lawyer.  I just don't want to go in their blind.  I've been reading online today but I figured you guys could give me some points too.

Edited by 40shades-of-blue

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18 mins ago, 40shades-of-blue said:

It's my parents house and I still live there. We have no plans of moving. My dad died two days ago.  He was always worried that if one of the them needed some like of long term care we would eventually lose the house.  Of course we dragged out feet and now here we are.  I am just thinking ahead that if something happens to my mom now and she needs to be somewhere long term.  I recall him saying the 7 year time frame too.  Obviously I need to talk to a lawyer.  I just don't want to go in their blind.  I've been reading online today but I figured you guys could give me some points too.

yeah, unfortunately right now is the worst time to have to deal with such things, take some time for things to calm down then speak with an attorney, they will walk you through the best options. Its unfortunate that if a nursing home or long term is needed it doesn't matter if you have $20 or $200K the nursing home take is all. but i'm sure there is a way around it.

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27 mins ago, Sandflee said:

yeah, unfortunately right now is the worst time to have to deal with such things, take some time for things to calm down then speak with an attorney, they will walk you through the best options. Its unfortunate that if a nursing home or long term is needed it doesn't matter if you have $20 or $200K the nursing home take is all. but i'm sure there is a way around it.

All my Mom was able to keep after she was institutionalized was $200 a month from her Mass state pension.

Cabo

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53 mins ago, MakoMike said:

Agree. But if she gifts to him now there prolly won't be any gift tax, and he'll get a stepped up bases to today's market value. But you're right he needs someone to do the math for him.

No step up in basis on a gift.  But with dad having passed 2 years ago and having likely been a 50% owner, at least half of the basis should now be stepped up, so not tragic from a cap gains perspective to get the home in his name (especially since he is living there and could probably claim the primary residence exemption to shelter $250k in cap gains on the home).

 

43 mins ago, 40shades-of-blue said:

It's my parents house and I still live there. We have no plans of moving. My dad died two days ago.  He was always worried that if one of the them needed some like of long term care we would eventually lose the house.  Of course we dragged out feet and now here we are.  I am just thinking ahead that if something happens to my mom now and she needs to be somewhere long term.  I recall him saying the 7 year time frame too.  Obviously I need to talk to a lawyer.  I just don't want to go in their blind.  I've been reading online today but I figured you guys could give me some points too.

A realty trust could be an option if time wasnt of the essence, which it sounds like it is.  If not, you would adjust the Schedule of Beneficial Ownership from mom to you as a percentage (calculated on the applicable gift tax exemption as a percentage of the fair market value of the home).  This keeps you above board on gift tax implications, but takes a decent amount of time to get out of mom's name.  Add on the applicable look back period and this likely isnt your best bet.  

 

I'd look for an elder law attorney in your area, they tend to be cheaper than traditional estate planning attorneys and specialize in the gifting requirements to get assets out of older peoples names to keep them eligible for medicare/caid and their homes out of the nursing homes' hands.  Irrev trust or outright gift to you likely is the quickest way to do what you want, just make sure the appropriate gift tax filings are done.  You inherit mom's cost basis (insert my comments above here).  There's always the risk that this gets undone based on the possibility of the lookback, but the sooner you act likely the better. 

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Just now, Sandflee said:

 

His Dad passed 2 Days ago 

my bad, misread his post.  think i do recall his post about dad passing now.  

 

either way, the step up for dad's share should apply. condolences for your loss, 40shades.  tough time to have to process all this noise. 

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