tax implications

[smurflee]

What is the name of your state (only U.S. law)?
CAlifornia
my grandmother lives here in california and is on social security but she owns a house in oklahoma. Because she just had a stroke she wants to deed the home over to me before she sells it. What tax implication are invloved with me or her? Will she oay taxes if she just deeds it over to me for 10.00 or will i pay capital gain taxes? will her social security benefits be affected?

 

[tranquility]

How much is the house worth? Is your grandmother receiving medicare or medicaid? Why does she want to gift the house?

 

[smurflee]

the house is worth 150k.. she wants to sell the house but she wants it in my name ust in case she passes in the near future. she just had a stroke soshe wants to have the proceeds from the home sale? should we sale it after she deeds it to me? or should she sale it and then give me the proceeds? And yes she has medicare

 

[LdiJ]

the house is worth 150k.. she wants to sell the house but she wants it in my name ust in case she passes in the near future. she just had a stroke soshe wants to have the proceeds from the home sale? should we sale it after she deeds it to me? or should she sale it and then give me the proceeds? And yes she has medicare

If she gives you the house, then you will have her basis in the house and if you sell it, your capital gains could be very high, therefore you could pay a high amount of capital gains tax. She would also have to file a gift tax return, which most likely would not require any tax paid at this time, but could effect her eventual estate.

If you inherit the house from her, you will get a stepped up basis to fair market value as of the date of her death, and therefore, if you sell it you will have little to no capital gain, therefore little to no capital gains tax.

If you are hoping to make her eligible for medcaid, (not medicare) by her gifting you the house, there is a 5 year look back period.

 

[tranquility]

I agree with LdiJ with one proviso, the step up issue is coming to be a problem. In 2010 the rules change and in 2011 they change again. Change a lot. Financial calculations are becoming difficult in estates right now.

My main advice is for rich people to avoid Thanksgiving next year.

 

[smurflee]

what would be required if she says iinherit the house? what legal form are required?

 

[LdiJ]

I agree with LdiJ with one proviso, the step up issue is coming to be a problem. In 2010 the rules change and in 2011 they change again. Change a lot. Financial calculations are becoming difficult in estates right now.

My main advice is for rich people to avoid Thanksgiving next year.

The rules for basis are changing? We haven't heard anything about that...or at least I haven't. Have you got a link so I can study up on it? That's a biggie.

 

[LdiJ]

what would be required if she says iinherit the house? what legal form are required?

She would need to have a will, and she would have to leave you the house in her will.

 

[tranquility]

The rules for basis are changing? We haven't heard anything about that...or at least I haven't. Have you got a link so I can study up on it? That's a biggie.

The code section is 1022.

TaxAlmanac - Discussion:2010: Change from step-up basis rules to carryover basis system?

Thinking About the Impossible for 2010: No Estate Tax and Carryover Basis

 

[LdiJ]

The code section is 1022.

TaxAlmanac - Discussion:2010: Change from step-up basis rules to carryover basis system?

Thinking About the Impossible for 2010: No Estate Tax and Carryover Basis

Thank you!