Gifting Real Property and Stocks.

What is the name of your state (only U.S. law)? Florida.

I am 60 years old and I own my home in FL free and clear. It is worth approx. $125,000. Can I gift it to my two daughters who both live in MA and rent it from them for a nominal rent instead of leaving it to them in a will? I also have a stock portfolio of approx. $289,000 can I gift that to them too? If so what rate would something like that be taxed at compared to the cost of probating a will? I have been giving one of my daughters $11,000 for the past two years as that is allowed without any tax being due from either of us.

are you aware that if you gift the property to them while alive, your daughters will have a tax basis on it equal to your own ?

if they inherit it, they receive it at the tax basis of what it is worth at the time of your passing.

could be a great deal of income tax saved.

best bet is to place it in trust, so that you have full control of the asset while you live, and it will pass on to your daughters when you die - with a full-stepped up basis, and free of probate costs.

your basis in the house is typically the price you paid for it when you acquired it.

same is true of the stocks. the daughters will receive it at a stepped up basis. assuming of course that they are worth more now than when you purchased them, that will also save on income tax.

Thank you. I will look into setting up a trust.

Further, it can screw your medicaid eligibility to start giving away assets.