How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Guru_Guy Your Own Question

Guru_Guy
Guru_Guy, Lawyer (JD)
Category: Tax
Satisfied Customers: 2418
Experience:  I am a lawyer who understands tax law and finance.
1987257
Type Your Tax Question Here...
Guru_Guy is online now
A new question is answered every 9 seconds

can my mother, who is still living, give or sell her house ...

Customer Question

can my mother, who is still living, give or sell her house to me without me or herself taking on any tax consequences
Submitted: 6 years ago.
Category: Tax
Expert:  Guru_Guy replied 6 years ago.
Hello,

If this has been your mother's primary residence for at least two of the last five years, she can sell the house to you for up to $250,000 more than she paid for it without either of you incurring any income tax consequences.

If the house is worth more than at, the difference could be considered a gift. But even in that case, while your mother might have to file a gift tax form (IRS form 709) neither she nor you would not owe any gift taxes unless she has used up her $1 million lifetime gift limit.

Some localities charge a transfer fee or tax whenever a house changes owners. Localities often take that opportunity to reassess the value of the house for property tax purposes. But if you stay within the limits I have outlined above, there should not be any immediate tax consequences.

I hope this helps!

___________________

IRS CIRCULAR 230 NOTICE: Absent an engagement for written tax advice prepared in compliance with the regulations promulgated by the U.S. Department of Treasury, no person prepared the written information contained in or accompanying this communication for use or reliance, and no taxpayer can, therefore, use or rely upon the written information contained in or accompanying this communication, (i) to avoid any penalties that the IRS may impose, or (ii) for the purpose of promoting, marketing, or recommending to another party any tax-related matters.
Guru_Guy, Lawyer (JD)
Category: Tax
Satisfied Customers: 2418
Experience: I am a lawyer who understands tax law and finance.
Guru_Guy and 4 other Tax Specialists are ready to help you
Customer: replied 6 years ago.
Reply to Guru_Guy's Post: understood that     ---- but if i take that money and payoff home or my business building will I incur capital gains, of any type, at end of year.
Customer: replied 6 years ago.
also how can she give it or gift it to me without money being involved
Expert:  Guru_Guy replied 6 years ago.
If she sells the home to you, your basis will be the purchase price. If you sell it for more than the purchase price, you will pay capital gains taxes on the difference between the purchase price and the sales price when you file for that tax year.

If she gives the property to you, and the gift does not put her over her $1 million lifetime gift limit, she will not owe any gift taxes. However, your basis in the property will be the lower of her basis or the fair market value at the time of the gift. Therefore, if she bought the house long ago and has a low basis, you are going to get nailed for a lot of capital gains when you sell. Of course, if you live there as your primary residence for at least two years, you can qualify for a $250,000 exemption on gains.

One option is for your mother to retain a life estate in the property while transferring the remainder to you. In such a scenario, you have a property interest in the property, but do not get full title until your mother's death. This allows you to get a stepped up basis of the fair market value of the home. The disadvantage of this method is that you don't get full title until death and cannot usually sell the home until your mother's death.

If your plan is to sell the home immediately, you would be better to have your mother sell the home herself, take the $250,000 primary residence exclusion then give you the proceeds from the sale.
Guru_Guy, Lawyer (JD)
Category: Tax
Satisfied Customers: 2418
Experience: I am a lawyer who understands tax law and finance.
Guru_Guy and 4 other Tax Specialists are ready to help you
Customer: replied 6 years ago.
Reply to Guru_Guy's Post: but again, when she gave me the "proceeds" would i not have to claim capital gain if i put it in the bank
Expert:  Guru_Guy replied 6 years ago.
No. If she sells the house while it is still in her name, she takes the gain. But because of the primary residence exclusion, unless the gain is over $250,000, there is no taxable gain.

When she gives you the proceeds from the sale, it is considered a gift. There is no tax. Your mother would have to file a gift tax form (IRS form 709) but assuming she has not used up her $1 million lifetime gift exclusion, no taxes would be due by either of you for this cash gift either.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.