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Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 34795
Experience:  16 yrs estate law, real estate. Wills/Trusts/Probate
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My father has a rental home in California that makes very

Customer Question

My father has a rental home in California that makes very little income. My wife and I have been managing it for him since he was diagnosed with a brain tumor and had surgery resulting in decreased brain function. We want to sell the house and buy land in another state (NM) that will be shared by my siblings and I. We figure that he will eventually lose the property to medical bills (he is doing fine now but there is no telling how long that will last) and his owning the property is not really bringing him any sort of substantial income. I want to know how to get started with this process and what the best approach would be.
Submitted: 1 year ago.
Category: Estate Law
Expert:  Barrister replied 1 year ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.

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Are you saying that father is mentally incompetent?

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Has he been declared medically incompetent by his doctors or legally incompetent by a judge?

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Do you have a financial power of attorney for him?

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thanks

Barrister

Customer: replied 1 year ago.
Hey Barrister,My dad is still able to function at a high enough level to live on his own but does have some cognitive reduction. I have full power of attorney for him as do my siblings. He has also agreed to this course of action.
Expert:  Barrister replied 1 year ago.

Ok, then if you have a financial POA, then you have the legal authority to sell the property immediately with father's consent. With that said, you can either list the property with a realtor or if you wanted a fast sale, contact an auctioneer.

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Then once the property is sold father can gift the money to you and siblings or simply agree to allow any new property that is purchased to be titled only in your and siblings' names.

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If the amount of the gift is over $14K each, then he would need to file an IRS Form 709 with his taxes in the year of the gift and use up a portion of his $5.45 million lifetime gift tax exemption so he can avoid any gift taxes.

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thanks

Barrister

Customer: replied 1 year ago.
One of the things that we were wondering was whether it is better to take ownership of the house (maybe as a trust) or just sell it while it is under his name. If we sell while it is under his name and he gifts us the money what are the tax implications for him?Thanks,casey
Expert:  Barrister replied 1 year ago.

One of the things that we were wondering was whether it is better to take ownership of the house (maybe as a trust) or just sell it while it is under his name.

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If it gets transferred to a trust and then sold, the trust will pay much higher capital gains taxes than if it is sold directly out of father's name.

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If we sell while it is under his name and he gifts us the money what are the tax implications for him?

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I went over avoiding any gift taxes in my previous post, (the part about him filing the 709 Form) but he would still owe long term capital gains taxes on the sale of the investment property. The rate is dependent on his income, but can go from 0% up to 20%.

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thanks

Barrister