quitdeed/tax question

What is the name of your state?
Pennsylvania



My father would like to quitdeed me his home so that I could obtain an equity loan which would allow me to do upgrades to the house. Also it would eliminate the inheritance tax.
My question is as follows- should he quitdeed the home to me, or sell the home to me for a small sum? How will this affect my tax situation? The house is worth $150k right now--- please give me any imput or advice that you have. It is appreciated.

Thanks so much!!
Liza

What inheritance tax? Unless he's got more than $1M, there is no federal inheritance tax. The upper limit might still be $675,000 for PA, though. He clearly needs to talk to an estate planner & find out what his actual estate tax situation is before making any decisions.

If he gives you the house, he doesn't save any estate taxes. The value of the house is included in his "taxable estate" at death. Plus, if he gives you the house, you do not get any step up in basis. This could result in you paying taxes later when you sell the place.

"QUOTE"If he gives you the house, he doesn't save any estate taxes. The value of the house is included in his "taxable estate" at death. Plus, if he gives you the house, you do not get any step up in basis. This could result in you paying taxes later when you sell the place"END QUOTE"


Why would the house be included in his taxable estate upon his death if I own the house?

Inheritance tax in PA is 6%...

Because, if he gives you a $150,000 house now, the amount of his estate that can be passed to his heirs tax-free goes from $1M to $850,000. As for PA taxes, most states allow a credit on the estate taxes that results in the forst $675,000 - $1M passing tax-free. He will need to contact a PA attorney to see what the PA law is.

Also, many states have probate "fees" that are linked to the value of the probate estate. People get around this fee by putting their big ticket items into living trusts, joint tenancy, etc.