Deed question

State-Wyoming

My Grandmother owns her home completely. Her husband passed away a few years ago and there is no mortgage on the home. I am the only grandchild and my father is the only son, he wants nothing to do with the house. My question is, what is the best and cheapest way to get the home in my name and out of hers. I don't want to have to pay a large gift tax, if I decide to sell the property down the line. If we quit claim or warranty deed it to me what costs will I entail? Will I also be able to take a loan out on the property for home improvements?

Thank you.

And if Grandma has other plans for HER home, or the money from selling HER home? Who says she may not want to use that asset herself sat some point to get the most out of her remaining years?

Assuming nextwife is wrong here -- and she probably isn't -- any transfer of the property from her to you while she is still alive will involve a gift tax, and you will not receive a step-up in the basis. The gift tax is payable by the giver, not the receiver, and is simply deducted from her exclusion when she dies, so unless the current value of the house and the rest of her assets combined add up to more than the exclusion -- currently $1.5 million -- then there is no gift tax to pay.

However, if you choose to sell the house, then you will use what Grandma paid for the house originally as the basis for tax purposes, and your taxable gain will be the selling price minus what Grandma paid for the house.

If, on the other hand, Grandma were to leave you the house in the will, and assuming the total value of the estate does not exceed the exclusion, then you would get the house with the basis "stepped-up" to the fair market value of the house at death, so if you sold soon after death, there would likely be no taxable gain. That's how you minimize the taxes.

There may be other tax minimization strategies as well -- what you should do is ask Grandma to go talk to an estate planning professional.

Wyoming
In response to the first reply, I didn't give all the information regarding the house. My Grandmother cannot have the house in her name, or have the money from the sale of the house because the senior home where she wants to move will not accept her. She will have to much in assets. Hence, her decision to put the house in my name.
Thank you for the second reponse. We are meeting with an attorney next week and I wanted to be informed, so I knew what questions to ask and what to expect.

J_H said:

Wyoming
In response to the first reply, I didn't give all the information regarding the house. My Grandmother cannot have the house in her name, or have the money from the sale of the house because the senior home where she wants to move will not accept her. She will have to much in assets. Hence, her decision to put the house in my name.
Thank you for the second reponse. We are meeting with an attorney next week and I wanted to be informed, so I knew what questions to ask and what to expect.

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There is a "look back" period in every state and I cannot tell you what it is in your state. That is, if grandma wants to get state aid, the state can look back as far a five years ago (in some states) to see what she owned.

Be sure your lawyer knows about that and tells you what (if anything) you can do about it.

J_H said:

Wyoming
In response to the first reply, I didn't give all the information regarding the house. My Grandmother cannot have the house in her name, or have the money from the sale of the house because the senior home where she wants to move will not accept her. She will have to much in assets. Hence, her decision to put the house in my name.
Thank you for the second reponse. We are meeting with an attorney next week and I wanted to be informed, so I knew what questions to ask and what to expect.

Click to expand...

Well, next time, give all of the information. As seniorjudge noted above, "spending down" assets in order to qualify for aid is fraud, and can result in fines and jail -- so make sure your lawyer knows not only WHAT you want to do, but WHY you want to do it.

Thank you again. She won't be applying to any state aids. She currently has Social Security and can live on that. I don't know the future and I don't know if she will need to apply for anything in the future. Like I mentioned before I am very unfamiliar with this and I don't want either one of us to run into anything illegal. We are trying to figure everything out while she is still healthy. I am just trying to get some advice. Sorry for the confusion.

Have you flat out talked to her about buying the house at a reasonable number where you make payments directly to her , (contract for deed ) It will spread her income from the sale of the home out over a period of time and as long as the sale is a reasonable amount then it wont raise any flags with the system should she have to seek nursing home care . She may have to use the monthly payment to help pay for her care but this way you dont have to worry about qaulifying for a loan and as I said it will let her make use of the money over a period of time . This type of thing is best set up by a lawyer who can make sure there are no mistakes , Try the links up top to locate a Attorney who has experiance in elder laws and they can let you know if this will work out well or not .

Thank you FarmerJ, I will be meeting with an attorney on Tuesday. All of this advice has been very helpful.