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Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!
Good afternoon. Can you tell me whether or not the property has appreciate substantially since your mother in law purchased it? Thanks.
Thanks for following up. The key is to get the step up in basis to its fair market value. You can do this in one of two ways: i) she can transfer it to you now but retain a life estate; or ii) she can wait and give it to you at her death. Either way, at her death, the basis is adjusted to its fair market value so that you would only have gain on sale to the extent of appreciation after her death.
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Thanks for following up. No, there would be no tax issues for either of you. This would simply be a gift of a remainder interest. First, pursuant to Section 102 of the Internal Revenue Code, gifts are not income and thus do not need to be reported on the income tax return. There should be no gift tax consequences. 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 $5,490,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,490,000 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 $5,490,000.
You're very welcome. A real estate lawyer would be the proper attorney to help you with this.
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