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Irwin Law
Irwin Law, Attorney
Category: Legal
Satisfied Customers: 7408
Experience:  Lawyer & Real Estate Broker, 30+ years, foreclosure, land contracts, inheritance, probate.
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I have an LP with my parents which holds 4 rental properties

Customer Question

I have an LP with my parents which holds 4 rental properties in Boston. We put this together in the 90s, my parents are in their 80s now. I own 51% and they each own 25.5%. They haven't been involved in years and obviously, they are not going to live forever. The properties have increased probably fourfold since acquired and worth about $2.8million as there is no mortgage and owned outright. How can I get them into my name without paying huge taxes?
Submitted: 11 months ago.
Category: Legal
Expert:  Irwin Law replied 11 months ago.

Good afternoon, and thanks for using Just Answer. I can answer your question in general terms because I do not have all of the information concerning your parents future estates, or your personal financial information. That said, there are two taxes that you have to be concerned with. The first is estate tax that may be imposed when your parents pass away. The second tax is capital gains, which is imposed when you ultimately sell the properties. At present, the estate tax exclusion for each of your parents is in excess of $5 million. Absent skyrocketing values, there is little threat of estate tax, if they choose to pass them to you by their wills after death. If the properties are willed to you instead of gifted during lifetime, your tax basis will be the value of the properties on the date of death of your parents. It is called a "stepped-up basis". If your parents were to transfer the properties to you now, then your basis would remain their cost basis (i.e. about $600k) and when you sell the properties later on, your capital gains tax could be 15% of the increase in value. Thus, the tax advantage to both you and your parents will be in holding the properties and passing them through to you by way of inheritance, rather than by deeding the properties to you now. This information should be reviewed with a local estate planner.

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