Legally, do I have to wait for buyout?

[LdiJ]

Given that the transaction in either case is the sister buying out the OP's interest in the home the income tax effects will be the same either way. The OP's basis in his/her half share of the house is half the fair market value (FMV) of the home on the date their father died. The net proceeds of sale are what the OP gets from the sister for his/her half interest less certain expenses of sale, if any. The gain or loss is the difference between the net sale proceeds and his/her basis. If the sale occurs fairly soon after the death there should be little gain or loss as a result of this.

On top of that, there is far more danger to the house being put in the sister's sole name, with only a promise to buy the OP out, than anything potential complication there might be to having multiple names on the deed.

 

[justalayman]

if you’ve never co owned property with somebody that isn’t your best friend it’s hard to understand just what and how severe the problems can be.

It can suck, especially if sister decides she doesn’t want to bother with refinancing the house after probate is closed. I didn’t see what state this is but if a partition action is possible, it won’t be free.

My suggestion is to try to have the op paid and the house in a single name at closing of probate.

 

[LdiJ]

if you’ve never co owned property with somebody that isn’t your best friend it’s hard to understand just what and how severe the problems can be.

It can suck, especially if sister decides she doesn’t want to bother with refinancing the house after probate is closed. I didn’t see what state this is but if a partition action is possible, it won’t be free.

My suggestion is to try to have the op paid and the house in a single name at closing of probate.

Yes, of course if things can happen so that the OP and his stepsister can get paid via the estate that would be better. However, once again, I will reiterate that it would be highly stupid to allow the house to be deeded in just the sister's name prior to the OP and his stepsister getting their financial shares, no matter how complicated that might make things later.

 

[Taxing Matters]

However, once again, I will reiterate that it would be highly stupid to allow the house to be deeded in just the sister's name prior to the OP and his stepsister getting their financial shares, no matter how complicated that might make things later.

If the OP got a solid promissory note and mortgage/deed of trust on the property then it may be worth letting the sister take the home in her name only. Then if the sister doesn't pay, the OP may simply foreclose the mortgage lien/execute the deed of trust, sell the property, and get his/her money that way.

 

[Zigner]

If the OP got a solid promissory note and mortgage/deed of trust on the property then it may be worth letting the sister take the home in her name only. Then if the sister doesn't pay, the OP may simply foreclose the mortgage lien/execute the deed of trust, sell the property, and get his/her money that way.

The only thing I take issue with is your use of the word "simply".

 

[Taxing Matters]

The only thing I take issue with is your use of the word "simply".

It would likely be more straightforward and less costly than a partition lawsuit, and especially if it is a deed of trust it may require little or no court involvement. And the OP would be much more likely to get the full amount of his/her FMV for his/her share this way than with a partition suit.

 

[LdiJ]

If the OP got a solid promissory note and mortgage/deed of trust on the property then it may be worth letting the sister take the home in her name only. Then if the sister doesn't pay, the OP may simply foreclose the mortgage lien/execute the deed of trust, sell the property, and get his/her money that way.

That works, but its less complicated to deed the home in the name of all of the heirs, and later sell to the sister, than foreclosing on a mortgage would be. Or, in the alternative, don't close the estate and transfer the property at all until the sister sells her house and can buy out the others. The sister can buy the house from the estate (the price being reduced by her distributive share) and then distribute the cash to the other two heirs.

 

[Taxing Matters]

That works, but its less complicated to deed the home in the name of all of the heirs, and later sell to the sister, than foreclosing on a mortgage would be.

With the big assumption that the sister will actually do the buy out. The point is that if she doesn't, the OP is forced to do a partition suit, and in that case the mortgage alternative is probably the better one for the reasons I've already stated.

Or, in the alternative, don't close the estate and transfer the property at all until the sister sells her house and can buy out the others. The sister can buy the house from the estate (the price being reduced by her distributive share) and then distribute the cash to the other two heirs.

That's great, again if the sister is willing to do the buyout in a timely manner.

 

[t74]

Why cannot sis move in and pay fair market rent to the estate? That would be fair to all and encourage sis to sell her existing home more quickly