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Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 54014
Experience:  29 years of experience as a tax, real estate, and business attorney.
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Hello I have a debt due of 80k-102k that is still in negotiations.

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Hello I have a debt due of 80k-102k that is still in negotiations. My children have an investment account and are willing to help with the botXXXXX XXXXXne. I am retired and have Soc. Sec. in the low income bracket. I own a house and a car. My questions are 1. If they draw there will be 4-5K tax due on the money for filing yr. 2013. 2. Also they will be spending that money on mom could that be considered gifted money and taxes due?
3. Or should I consider and would it be better tax wise to deed them the house for the money owed?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. 1) If they withdraw money from a non-retirement investment account, the withdrawal will not result in any taxation. 2) There should be no gift tax consequences of the gift to you. Recipients of gifts are not subject to gift tax. And, there should also be no gift tax due from the donor. Each donor can give $14,000 per year per person under the annual gift exclusion. In addition to that, for any amounts in excess of the $14,000 in a year, each person has a $5,250,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,250,000 in gifts over and above the $14,000 annual gift exclusion amount without incurring gift tax....the donor must file a gift tax return to let the IRS know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative additional gifts have exceeded the $5,250,000. 3) There is really no need to do that unless you are worried about needing Medicaid at some point; in that event, you are probably wise to sell them the house for the money owed and then they can either lease it back to you or simply allow you to live there.




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Customer: replied 3 years ago.


Would selling them the house for money owed then create income for me? This is a problem as I am already low income and receiving services. Could I just put them on the deed and if so what concerns do I need to consider going forward. Thank you, Donna

You're welcome and thanks for following up on this. There would be no gain from a sale of the house because you have a capital gain exclusion of up to $250,000 from the sale of your principal residence. If you put them on the deed..it would either be considered a sale and/or a gift...neither of which would result in tax to you.

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