paying off Mom's mortgage

[dboutback]

What is the name of your state? Texas
My husband wants to pay off the mortgage on his mother's condo in Houston and have the title put in his name. His mother wants this also. The amount owed is less than $1000.00. Do we need to get an attorney or real estate agent to do this? Also, she is 81 years old and has been exempt from paying property taxes since she was 70. Will there be any kind of back taxes that will need to be paid, or any other kind of fees or obligations that will need to be paid?What is the name of your state?

[CAowner]

Since no one else has answered, I will give my understanding and others can correct me if I am wrong. I believe if she signs the title over to your husband, there would be gift tax involved. If she leaves it to him as part of her estate, not only will there be no tax (as long as her estate is valued at less than $2 million*), but he will end up with a "stepped up" cost basis on the property (the fair market value at the time of her death). Can't comment on the property tax issue.

It would seem better to leave the title in her name, unless maybe she ends up needing extensive nursing home care in the years to come and her home is required to reimburse for that expense.

Please understand that I am not a lawyer or tax accountant.

CAOwner


*this amount changes each year through 2011

[pojo2]

The previous poster is partly right about the gift tax but it also includes gifts while she is still alive as long as her estate is small and under the current limits.

It would seem better to leave the title in her name, unless maybe she ends up needing extensive nursing home care in the years to come

Medicaid fraud comes to mind with that statement and this kind of transaction it will be examined by the state for up to 4 years or longer.

Best see an Atty to get this done properly.

[Country Living]

Originally Posted by dboutback

. Will there be any kind of back taxes that will need to be paid, or any other kind of fees or obligations that will need to be paid?

This question should have gone under the Tax Forum.

Yes - the property taxes are "frozen" - but the liability is still accruing. If the title to the house changes or she passes away - the taxes comes due.

As Pojo said - you may have Medicare issues. Also, if she is intending to leave you the property after she passes - then you're losing out on the "stepped-up basis".