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Transfer Title or Will the Property?

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JimNC

Junior Member
Florida. A parent is dying in Florida. Is it more advantageous to the child (who lives in NC) to be willed the house or should the parent transfer title to the house prior to his death? If transfer the title is the answer, does it make a difference if no money is transacted with the title change or should a particular amount of money change hands?

Thank you. JimNC
 


perhapsure

Junior Member
I just checked on this topic with irs.
Inheritance is tax free, because you receive the current market value as your tax basis, or cost. If you sell the house soon after the inheritance, you have little time for the market value to increase, so the value should be the same when you sell as when you inherit. So, your cost in the property is the same as the selling price: no taxes.

Putting a person on the deed changes things.
If you add one name to the deed, then you pay capital gains tax on your portion of the home. If two parents are on the deed, and they add one name, then you pay one/third of the total capital gains tax on the sale.
Irs says that they cannot give you a gift when they die, so you pay for the gift they gave you while they were alive. You inherit two/thirds of the home in the above example.

If they deed the home to you before they die, then you pay all the capital gains tax on the sale. Big difference. And if they had deferred gains from previous home sales then you get hit with all the deferred gains. This is not a good idea, unless other factors make it good, like no deferred gains, and this was their first home purchase, and they bought it two months ago.
You need to check Florida probate procedures: if it is a quagmire, then do the deed, but just add the name.

This was really hard for me to dig this out. There is a lot of bad info out there.
 
This one is not even close. You'll want to inherit to get the stepped up basis. If you get the house, or any part of it thereof as a gift, then your basis is the donor's cost basis.
 

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