Sold Mom's Home - Listed In My Name
My Mom put her house in my name a number of years ago to prevent the state taking it away from her in case she went to a nursing home (her biggest fear). She recently passed away and I have sold her home. Being that the money is not part of her estate.... I'm sure that it is taxable. Do I have any options to prevent being taxed at this time? (i.e rolling money in current first home mortgage, perhaps buying a second property (camp?), college fund (529 in NY), IRA?).... and if so, how much time do I have? (the same two years if I sold my primary residence? I'm new to this site.... and thank anyone who can help me with this. THANKS!!!
Best bet is to spend a few bucks and speak to an accountant with excellent background in real estate. He/She will best guide you.
If you manage to get a taxation attorney who specializes in real estate that will probably be even better.
Is it already closed, or under contract?
If it hasn't closed yet, a 1031 exchange would be great.
http://www.ipx1031.com/benefits.html
You did not mention if you own any other homes?
Quote:
On 2004-10-10 11:39, 64Ford wrote:
Is it already closed, or under contract?
If it hasn't closed yet, a 1031 exchange would be great. Yes, unfortunately it has already closed. Thanks.
http://www.ipx1031.com/benefits.html
Quote:
On 2004-10-10 11:40, roboxking wrote:
You did not mention if you own any other homes? Yes. I do own a first home.
Piercy,
Here are the basic elements as i understand them. Some years ago, your mother deeded you her house.You have not sold that house
You did not use the house as your primary residence during your period of ownership.Your cost basis in the property is the same cost basis that your mother had when she gave you the house. The difference between your cost basis and your net sale proceeds is your taxable profit.
Your profit is taxed as a long term capital gain. The sale of the proeprty triggers a taxable event. Whatever you do with the money now will not reduce your tax liability.
It is unfortunate that you did not seek proper counseling before your mother deeded you the property. There were ways for your mother to divest the house, avoid Medicaid scrutiny, avoid probate, and allow you to inherit the property at its FMV at her death (avoiding capital gains when you sell shortly after inheriting).
Quote:
On 2004-10-10 17:32, NewKidinTown2 wrote:
Piercy,
Here are the basic elements as i understand them. Some years ago, your mother deeded you her house.You have not sold that house
You did not use the house as your primary residence during your period of ownership.Your cost basis in the property is the same cost basis that your mother had when she gave you the house. The difference between your cost basis and your net sale proceeds is your taxable profit.
Your profit is taxed as a long term capital gain. The sale of the proeprty triggers a taxable event. Whatever you do with the money now will not reduce your tax liability.
It is unfortunate that you did not seek proper counseling before your mother deeded you the property. There were ways for your mother to divest the house, avoid Medicaid scrutiny, avoid probate, and allow you to inherit the property at its FMV at her death (avoiding capital gains when you sell shortly after inheriting).
Hey NewKid..... this is awesome information. Very helpful!! Thanks!
Some follow-up:
1. I do not know what the basis cost was on the home... but I'm sure some research will find that.
2. I did sell the home recently for $80K.
3. From what I gather then: I am only responsible for the tax on $80K - the cost basis amount?...... and by chance if it was sold "below" the cost basis amount then I would not owe any taxes?
Thank you again for your time and effort helping me with this...... I owe you one!
Sorry about bullet 2 -- my typo. I meant to say "You have now sold the house".
Quote:From what I gather then: I am only responsible for the tax on $80K - the cost basis amount?...... and by chance if it was sold "below" the cost basis amount then I would not owe any taxes? You can go to the courthouse and check the records held by the Registrar of Deeds. You should be able to find out what original price your mother paid for the house.
How did you set the sale price? Did you use current comparable sales to establish the property's value? If your mother had the house for some time, then I would guess that her cost basis is considerably less than your sale price.
If, by chance, you sold the house for less than your cost basis, then you have a capital loss to claim. Your tax advisor is in the best position to assist you with your tax return as well as the estate return for your mother.