Q: My mother wants to gift/sell a home for half the value. Is she able to gift this without any tax implications?
My mother inherited our grandmother's house and wants to gift the home for half the value of the home. Is she able to do this without incurring some sort of large tax burden the following year?
A: Generally, it is better to inherit a home via estate planning and or a proper deed (enhanced life estate deed, ladybird deed) as you will get a stepped-up basis for the value of the home at or near the date of death. If the asset is gifted then a gift tax form will need to be completed and sent to the IRS, currently you can give $19,000 each year and a lifetime amount currently set at $13.99 million for 2025, so for most people you basically just have to fill out the forms and submit and report it to the IRS and there are no tax consequences whatsoever, unless of course the assets owned by the gifting person substantially exceed that $13.99 million threshold. I would advise to speak with a tax preparer if there is any confusion or doubt and with an estate planning attorney if proper estate planning is desired for this and other assets via a Will and or Trust as applicable under the circumstances.
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A:
An Enhanced Life Estate Deed (Lady Bird Deed) or a Revocable Trust can help your mother transfer the home efficiently while avoiding probate and minimizing tax consequences.
Lady Bird Deed
This allows your mother to:
Retain full control of the home during her lifetime.
Avoid probate by automatically transferring the home to the named beneficiary upon her passing.
Preserve Medicaid eligibility and avoid estate recovery.
Allow the recipient to receive a step-up in basis, reducing potential capital gains tax.
Revocable Trust
Placing the home in a trust allows her to:
Maintain control as trustee while designating a successor.
Avoid probate and transfer the home smoothly to the beneficiary.
Still benefit from the step-up in basis.
Have more flexibility than a Lady Bird Deed for future changes.
If she wants a simple and cost-effective transfer, a Lady Bird Deed is a great option. If she wants more control and flexibility, a trust may be better.
Let me know how you’d like to proceed, and I’d be happy to assist.
Best regards,
Anwar Hadeed
Hadeed Legal
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