Parents own land without lien

[mciver81]

What is the name of your state? CA

My parents own 1 acre of land free and clear and would like to allow my sister and myself to build a home. The land is not in trust, it is in both my parents names, the plan has always been to give the land to both my sister and I. I'm concerned about capital gains tax my parents may face. The land is very valuable (San Diego CA) and would go beyond the one time gift the IRS allows.

Should land ownership be transfered? Pros, cons etc.
Should ownership remain the same and home be "rented" by me? Income property tax? Pros ,cons etc

How would financing work into all of this?

Any general answers would help

 

[lwpat]

"Any general answers would help"

If you build a home on your parents property the home will belong to them. Since they own the land any financing would have to be in their name.

What happens if your parents divorce?

What happens if your parents change their mind and don't leave the property to you?

What happens if they become ill and have to sell the property to pay medical bills?

If both you and your sister share ownership some of the same questions would apply. Things change and you each need some protection so a buy/sell agreement would be in order.

My suggestion would be to talk to a tax professional who can advise the best way to structure the legal paperwork.

 

[HomeGuru]

And talk to a real estate or trust/estate attorney.