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She can gift it to you by doing a quick claim deed. However she may have to file a gift tax return. She will not owe any gift tax though. However, when you receive the property as a gift, you will have the same cost basis as your mother did. But if you inherit that your cost basis will be the fair market value of ther property as of the date of her death.
So, if her estate is not a huge amount that she will be subject to estate tax than it will be a good idea to inherit the property rather than get it as a gift.
Normally a person can give up to the annual exclusion amount $12000 for 2007 to a person, every year ($ 24000 in 2007 if spouses joins in for the gift) without facing any gift taxes and note that such amounts do not count as part of your $1,000,000 lifetime total.
Further, IRS allows a person to give up to $1,000,000 in gifts, total, in their lifetime, before they start owing the gift tax. (This gift is not per (donee)person but its a per donor limit). So you can make gifts that are worth up to a million bucks during your lifetime without paying the gift tax. . Even if you do not owe a gift tax because you have not reached the $1,000,000 limit, you are still required to file gift tax return if you made a gift that does not qualify as excludable.
Hence, if you mother has not used up her life time exclusion, she can gift the house to you without owing any gift tax. She will however, have to file a gift tax return and report the gift to the IRS.
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.
If she is worrying about the nursing home care than she might want to gift it to you. She will not owe gift tax as discussed above and that will take the asset out of her estate.
Also, since she is healthy now.....if she gifts it now and does not need the nursing care for about 3 years than the asset will stay protected(and will not affect her aid) .....as normally there is a 3 year look back period in order to qualify for nursing care aid.
Selling the house can be at or below fair market value. If it is below fair market value than part of it is considered gift.
She will be able to exclude gain upto $250K if she owned and used the house as primary house for atleast 2 years. So she may not owe any capital gains tax.