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Ray
Ray, Lawyer
Category: Real Estate Law
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Experience:  Texas Attorney for 30 years dealing in real estate
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What are the law regarding home ownership to heirs. Moving

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what are the law regarding home ownership to heirs. Moving still have a mortgage thinking of renting (rent will cover mortgage) One son giving us money for down payment for new home large down payment at least $250,000. I want someday when we have passed away for this son to have the original house which we own - he would pay of any remaining mortgage - the house will probably be valued at around $900,000. Can we put the house in a trust for him to own someday? What would be his tax obligations?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Ray replied 1 year ago.
Hi and welcome to JA. I am Ray and will be the expert helping you today.
Here at the time you transfer the title either to trust or he inherits it by will, only owes taxes on the gain from that date forward.The current lifetime federal exemption is $5,430,000 so no taxes on inheritance federally.
Maryland exempts inheritances from a parent.Here is reference to that.
http://www.nolo.com/legal-encyclopedia/maryland-inheritance-tax.html
Overall you could just will it to him, the state would exempt him from inheritance taxes on transfer as would the federal government at least under current laws.
You can put it into a trust too.Likely the only taxes are going to be from gain here from when you put it into trust, or if you will it to him from the point of inheritance.
The trust is going to owe more because the gain starts when the trust is funded with the property, if you leave it to him by will tax wise he will owe less because it is not inherited until you decease when the gain begins under a will.But this may be offset by the costs and legal fees of probate.
In Florida this can be a major concern.Lawyer fees for probate are set by law.
Here are the statutory fees:
Value of estate up to $40,000: $1,500
$40,000 to $70,000: $2,250
$70,000 to $100,000: $3,000
$100,000 to $1 million: $3,000, plus 3% of the value over $100,000
$1 million to $3 million: $30,000, plus 2.5% of the value over $1 million
$3 million to $5 million: $50,000, plus 2% of the value above $3 million
$5 million to $10 million: $90,000, plus 1.5% on the value above $5 million
More than $10 million: $165,000, plus 1% of the value above $10 million
I appreciate the chance to help you today.Please let me know if you have more follow up.Thanks again.
You can do it either way of course he has to pay off mortgage or assume it if he intends to keep it.
I appreciate the chance to help you today.Please let me know if you have mroe follow up.
Expert:  Ray replied 1 year ago.
Reference to Maryland Inheritance Taxes.
http://taxes.marylandtaxes.com/Individual_Taxes/Individual_Tax_Types/Estate_and_Inheritance_Tax/Tax_Information/
Federal ..
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-Tax
Trusts..
http://www.cricpa.com/TaxationofTrusts.aspx?mobile=1
Bot***** *****ne here.
With trust you have legal fees upfront, more capital gains since it starts now for child, no probate legal fees or hassles.
With will you have less or no capital gain, you have probate costs and executor fees.
Its your judgment here what works best for you .You may have less liability with a trust.
I appreciate the chance to help you today.

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