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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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I have paid for my Moms condo for 10 years, and ...

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I have paid for my Moms condo for 10 years, and recently paid off her mortgage. the condo is still in her name and she wants to take herself off the deed and put me on it. I was told we just need to go to county tax office and file a "quick claim"? deed. Would I need to pay gift tax or other ? She has all the checks I wrote to her for mortagage , taxes , maintenance etc as proof that I have paid. If she left in her her will would that be just as good? She is 81 and in great health. the property is in New Jersey. thank you for any help you can give me.
Submitted: 6 years ago.
Category: Tax
Expert:  RD replied 6 years ago.

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.

Note

 

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.

Customer: replied 6 years ago.
Reply to RD's Post: thanks what she is worried about is if she needed to go into a nursing home or extended illness, would medicare/medicare qualified nursing home require her to sign over assets? this frequently happens when the elder does not have the $to pay for care. since I paid for it she wants to protect it for me. Her annuall income is less than 10K we supplement her with addtional $/ would it make sense for her to sell it to me,? does it have to be at FMV? she / we paid about 80K it is worthabout 100k.since this i her primary residence and she would not be reivesting would she have to pay capital gains onthe difference? is there a tax i would need to pay as the buyer?
Expert:  RD replied 6 years ago.

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.

 

 

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.

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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