Have Tax Questions? Ask a Tax Expert for Answers ASAP
Good afternoon. First, if you rent it now and then it transfers at your father's death, the basis will be stepped up to fair market value so if you sell it then, there will be no gain. If you are going to sell it before death, you want to sell it while it is a primary residence rather than a rental so he is eligible for his $250,000 capital gains exclusion. But, that still is going to leave a tax exposure. The exemption is not scheduled to change presently.
I hope this has given you the guidance you were seeking. I wish you the best of luck!
If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping other clients or taking a break.
If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.
If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you.
The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.
From childrens perspective, sell now, get $250,000 exclusion, pay current capitol gains on difference, gift sale revenue to children minimizing their tax exposure.
-Are capitol gain taxes scheduled to go up?
-Are gift exclusions set to change?
Rent now, transfer at death, change basis then so no capitol gains, but children exposed to high tax rate at sale of property? House is currently in trust so would it trigger inheritance tax?
Based on tax exposure to children, more benificial to rent house now and sell later, or sell now and take exclusions?
Capital gains are scheduled to go up.
If you gift it now, it will transfer gift tax free due to father's $1,000,000 lifetime exemption, but you don't get a step-up in basis.
Gift exclusions are not scheduled to change.
If the property is transferred at death, the children won't face any tax at sale because the basis gets stepped up to fair market value at death ($400,000) so there will be no gain.
No inheritance tax would result at these levels.
BotXXXXX XXXXXne...better to rent until death, then sell after death for no gain.