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Lev
Lev, Tax Advisor
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My mother owns her home, which is in a trust with her 4 childrens

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My mother owns her home, which is in a trust with her 4 childrens names.
She is very low on cash to live on.
She is 84, fair health.
What is the best way to give her cash, can we children buy the house?
What is the 10K gift that, can she give it to us, after we buy the house? Is that a one time deal.
Submitted: 3 years ago.
Category: Tax
Expert:  flopcat98 replied 3 years ago.
My first thought was a reverse mortgage. But if you want to keep the house in the family that wont work. I am going to send you to the straight tax people if you want to purchase the house in a way most favorable tax wise.
flopcat98,
Category: Tax
Satisfied Customers: 7144
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Expert:  Lev replied 3 years ago.

Hi and welcome to Just Answer!
What is the best way to give her cash, can we children buy the house?
There is no "best way" - each way have some advantages and disadvantages.

You may purchase the property from your mother. If the house is owned by a revocable trust - and your mother owned and used it more than two years - the capital gain (up to $250,000) will not be taxable for your mother.
If the house is owned by an irrevocable trust - the trust will pay income tax on the capital gain.
What is the 10K gift that, can she give it to us, after we buy the house? Is that a one time deal.

You may simply gift the money to your mother. A gift is not a taxable income for the recipient - so there is nothing your mother would need to report.

If during the year - you will gift more than $13,000 to any person - you generally will be required to file a gift tax return - but there will not be any gift tax liability unless the lifetime limit of $5,000,000 is reached.
The same is true if your mother gifts you the property. For gift tax purposes - a fair market value of the property should be used. Please be aware that if your mother will apply for Medicaid all gifts made within five years should be reported on her application.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22632
Experience: Taxes, Immigration, Labor Relations
Lev and 5 other Tax Specialists are ready to help you

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