home given to adult child

[joan marie]

What is the name of your state? NJ

If my mother (67, retired, living in Delaware) wants to transfer a free and clear home to me (46) in Ocean County, NJ, (which was her second residence) My mom owned this home for approximately 10 - 12 yrs. There is no mortgage.
What is the best way to do it?
What taxes will be involved? who is responsible for the taxes?
Would it be better to sell it to me for a small fee?
This home will become my primary residence and is valued at approximately $325,000. I will be selling the home I own now. Ive lived in my current home 4 years. I do have a mortgage.

Thanking you in advance for your response.
joan marie*

 

[LdiJ]

What is the name of your state? NJ

If my mother (67, retired, living in Delaware) wants to transfer a free and clear home to me (46) in Ocean County, NJ, (which was her second residence) My mom owned this home for approximately 10 - 12 yrs. There is no mortgage.
What is the best way to do it?
What taxes will be involved? who is responsible for the taxes?
Would it be better to sell it to me for a small fee?
This home will become my primary residence and is valued at approximately $325,000. I will be selling the home I own now. Ive lived in my current home 4 years. I do have a mortgage.

Thanking you in advance for your response.
joan marie*

There are some things for you to consider. Your mother will have to file a gift tax return. There will be no tax due unless she has exceeded her lifetime exclusion for gifting (2 million for 2006).

However, your "basis" in the property will be your mother's basis. Therefore if its anticipated that sometime in the future you will be selling the home, you may have to pay capital gains tax on a greater amount of money than if you had inherited the property.

There may also be state tax implications and you need to consult a local tax professional for information on potential state tax issues.

 

[xylene]

What is the name of your state? NJ

If my mother (67, retired, living in Delaware) wants to transfer a free and clear home to me (46) in Ocean County, NJ, (which was her second residence) My mom owned this home for approximately 10 - 12 yrs. There is no mortgage.

What is the best way to do it?

There is no straightforward answer to that question. It is going to depend on specifics of your family circumstances.

What taxes will be involved?

At the very least a taxing agency will be involved. As LdiJ pointed out- at the very least you will be filing a gift tax return. State taxes, deed registration fees may apply.

who is responsible for the taxes?

Gift taxes are generally paid by the person making the gift. There may be no taxes depending our your familiy. IF you wish you may pay the gift taxes due. As the recipient of the property state fees and taxes associated with property transfers would most likely be your responsibility

Would it be better to sell it to me for a small fee?

They are on to you. Whatever your mother sold the house to you below market value would be a gift. You could get away with a small amount below its market value without raising eybrows but that would still be cheating. A steep reduction below market value will not fly.

This home will become my primary residence and is valued at approximately $325,000. I will be selling the home I own now. Ive lived in my current home 4 years. I do have a mortgage.

You may have capital gains on the sale of your house.

You and your mother should discuss this substaintial gift with a trusted tax professional, skilled in estate planning, who has an understand of both of you and your mother's financial circumstances to optimize your outcome.

 

[joan marie]

Thank you for your thoughts* We are just starting to figure out how to do this. We arent looking to beat the system, but for the best legal : ) way of doing things. Naturally we will get an expert to help handle this for us. I think my mom will be covered under the 2million gift tax break. She has decided to give us some of our inheritances while she is still alive to enjoy it with us. I will be paying a small fee for the home, but certainly way under market value, as to buy out my brothers interest.

As is all things in life, there are good ways of doing things and very bad ways lol I was just looking for some information and direction towards the best way.

Thanks again
joan marie*

 

[xylene]

Glad to help.

Paying the least amount of taxes is no sin. In fact, as loathe as some are to admit it - the govt. goes out of its way to avoid overpayment of taxes. In a complicated gifting situation, you want to talk to a pro who can look at all the angles and figure out what is most optimum today and tommorrow.

Best wishes to you.