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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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My Mother is signing her house over to me. The house is assed

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My Mother is signing her house over to me. The house is assed by the local tax authority for approximately $47,000 and there is no mortgage. She is of low income and legally disabled.
What are the tax ramification for her and myself?
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thank you for your question. The act of your mother signing the house over to you is a gift. The amount of the gift is her basis in the house, which isn't necessarily the tax appraisal amount - it's what she's paid for the house, plus the cost of improvements, less any tax losses she might have taken (such as depreciation if she had a home office or used the home for a rental sometime during her life).

Because the amount of the gift is unarguably more than $13,000 she will need to fill out a gift tax return - however, unless she's given away more than $5 million in her lifetime, she's not going to owe a dime in gift taxes.

As the recipient, you will never owe taxes on gifts received. Even if your mother gave you $50 million, you wouldn't pay $1 in taxes on that amount.

So, as far as tax time goes, a gift tax return will have to be filed, but no taxes will be owed by either you or your mom.

There is one potential problem that I see. If your mother is low income, and tries to qualify for Medicaid, particularly if she needs to live in a nursing home, within the next five years, they will undoubtedly see she gave you this house. As a result of this transfer, your mother may be ineligible for Medicaid by an amount of time stipulated by the Medicaid department in your state of residence.

The transfer will not, however, impact your mother's Medicare eligibility, as Medicare is an entitlement. Medicaid, on the other hand, is purely needs based.

I hope this helps.

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