Lake Elsinore, CA asked in Estate Planning and Tax Law for California

Q: My mother wants to gift my wife and I her house. She has under 1 million in assets. What are the tax considerations

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2 Lawyer Answers
Jonathan Purcell
Jonathan Purcell
Answered
  • Estate Planning Lawyer
  • PETALUMA, CA
  • Licensed in California

A: There is a requirement to report gifts more than $15,000 per year on form 709.

The tax will be levied only if at the time of death, the combination of all lifetime gifts and donor's decedent estate, exceeds the the gift and estate tax exemption, then in effect, currently $11.58 million.

Jonathan Purcell is a California Attorney. This posting does not create any attorney-client relationship. The information presented here is general in nature and is not intended nor should be construed as legal advice for any particular case or client. For specific advice about your particular situation, please consult with your own attorney. This posting is not intended to constitute an advertisement or a solicitation

Nina Whitehurst
Nina Whitehurst
PREMIUM
Answered
  • Estate Planning Lawyer
  • Crossville, TN
  • Licensed in California

A: Your tax basis in the house will be the same as your mother's tax basis. This is called a "carrover basis". If you sell it you will have to pay taxes on the amount of any appreciation in value (sale price minus carryover basis). However, if your mom left the house to you in her will or in a trust, it would get a step up in basis to date of death value, which might save you a lot of money in taxes.

Also, normally such an inheritance would be your separate property, if that matters to you. It is uncommon for a parent to give property to a child and the child's spouse, not to say that can't be done. Just something to think about.

Finally, lifetime gifting can create havoc for your mother if she needs to apply for MediCal to pay for long term care (nursing home) expenses within 30 months after the date of the gift.

There are solutions to all of these problems. Your mother should invest in a consultation with an elder law attorney, both for her sake and yours.

Zaher Fallahi agrees with this answer

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