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Posted by Robert L. Altic Jr. on May 25, 2007, 1:41 pm
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Usually lurk, but a question after the passing of my mother.
She gave her house to my sister who lived with her about 17
years ago. My sister and I were going though the papers,
and the lawyer set it up as a gift to the daughter and the
deed was transfered to her name. My question is upon my
sister's death (not married and I will be the sole heir)
will the estate owe gift tax for the donation, and what will
be the valuation of the house, the assessed valued at the
time of the donation or at the time of the death of my
sister. Not being very knowledgeable about taxes, and
gifts, I guessing that it would be valued at the time of
donation and would be reported when sold by the estate. I
guess the estate would take the one time exception for the
sale of the house and the basis would be the value of the
house when donated to the time of the sale to deteremine the
profit. Unfortunately, this will become an issue in the next
5 to 10 years due to medical problems, so I am just starting
to gather information to help me process what I will need to
do. Many thanks to the group. Best, Bob
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Posted by Stuart A. Bronstein on May 25, 2007, 10:50 pm
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> Usually lurk, but a question after the passing of my mother.
> She gave her house to my sister who lived with her about 17
> years ago. My sister and I were going though the papers,
> and the lawyer set it up as a gift to the daughter and the
> deed was transfered to her name.
Was it transferred in her sold name or in joint tenancy?
Was the deed actually recorded?
> My question is upon my sister's death (not married and I will be
> the sole heir) will the estate owe gift tax for the donation, and
> what will be the valuation of the house, the assessed valued at the
> time of the donation or at the time of the death of my sister.
It's your mother's estate that would have had to account for
the gift and/or estate tax on the gift of the house to your
sister. If her total estate was under $1,000,000 (including
the value of the house) there wouldn't have been any tax to
worry about.
As far as your sister's tax basis, that could be
complicated. Did your mother reside in the house until she
died? Was the deed in joint tenancy or in your sister's
sole name? Was the deed recorded? Did your sister know
about it at the time? Was there an agreement that, in spite
of the deed, your mother would be allowed to live there for
the rest of her life?
Based on the answers to these questions (and perhaps other
depending on the answers) the basis in your sister's estate
will either be your mother's basis, or the value at your
mother's date of death.
As far as estate taxes for your sister, again if her total
estate is under $1,000,000 in value (or more if she dies
before 2011) there will be no estate tax.
Stu
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by James Lewis on May 25, 2007, 10:50 pm
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> Usually lurk, but a question after the passing of my mother.
> She gave her house to my sister who lived with her about 17
> years ago. My sister and I were going though the papers,
> and the lawyer set it up as a gift to the daughter and the
> deed was transfered to her name. My question is upon my
> sister's death (not married and I will be the sole heir)
> will the estate owe gift tax for the donation, and what will
> be the valuation of the house, the assessed valued at the
> time of the donation or at the time of the death of my
> sister. Not being very knowledgeable about taxes, and
> gifts, I guessing that it would be valued at the time of
> donation and would be reported when sold by the estate. I
> guess the estate would take the one time exception for the
> sale of the house and the basis would be the value of the
> house when donated to the time of the sale to deteremine the
> profit. Unfortunately, this will become an issue in the next
> 5 to 10 years due to medical problems, so I am just starting
> to gather information to help me process what I will need to
> do. Many thanks to the group. Best, Bob
Perhaps the simplistic answer is that what happened between
your mother and sister 17 years ago is well past the statute
of limitations. If the house was worth more than the annual
exlusion at that time, someone should have filed a gift tax
return. Unless your mother had used up her lifetime
exclusion at that time, no gift tax would have been owed
anyway.
Assuming the gift from mother to daughter was recent, engage
a tax practioner to file the necessary gift tax forms and
have her pay any gift tax due...again, if your mother did
not used her lifetime gift allowance, she likely will owe no
tax either if values are under $1,000,000.
If your sister dies and you inherit the house, your basis in
the house becomes the basis elected by the executor which is
either the value on date of death or 6 months later, and no
tax is triggered owed by you.
Mike
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Stuart A. Bronstein on May 29, 2007, 10:44 pm
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> Perhaps the simplistic answer is that what happened between
> your mother and sister 17 years ago is well past the statute
> of limitations. If the house was worth more than the annual
> exlusion at that time, someone should have filed a gift tax
> return. Unless your mother had used up her lifetime
> exclusion at that time, no gift tax would have been owed
> anyway.
If no gift tax return was filed, the statute of limitations
hasn't run on that gift. On the other hand it should have
been included in the mother's estate, and it if was then it
doesn't really matter.
Stu
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by joetaxpayer on May 25, 2007, 10:50 pm
Please log in for more thread options Robert L. Altic Jr. wrote:
> Usually lurk, but a question after the passing of my mother.
> She gave her house to my sister who lived with her about 17
> years ago. My sister and I were going though the papers,
> and the lawyer set it up as a gift to the daughter and the
> deed was transfered to her name. My question is upon my
> sister's death (not married and I will be the sole heir)
> will the estate owe gift tax for the donation, and what will
> be the valuation of the house, the assessed valued at the
> time of the donation or at the time of the death of my
> sister. Not being very knowledgeable about taxes, and
> gifts, I guessing that it would be valued at the time of
> donation and would be reported when sold by the estate. I
> guess the estate would take the one time exception for the
> sale of the house and the basis would be the value of the
> house when donated to the time of the sale to deteremine the
> profit. Unfortunately, this will become an issue in the next
> 5 to 10 years due to medical problems, so I am just starting
> to gather information to help me process what I will need to
> do. Many thanks to the group. Best, Bob
A few points to be made;
1) There was a better way at the time to transfer the house,
and avoid potential capital gains. By gifting the house the
way your mother did, your sister would have potential tax
due if she sold it. Water under the bridge, I suppose.
2) It was a gift, not a donation. This may sound pedantic,
but there is an important difference, and in financial
matters, it's important to use correct terminology.
3) Upon your sister passing, you receive the house with a
stepped up basis. i.e. your basis ('cost' you would use if
you then sold it) is the value on the day you inherit the
house. Her estate exemption is $2 Million this year and
next, $3.5 Million in 2009, unlimited in 2010, and if the
law isn't fixed, back down to $1Million in 2011. She can
gift you $12,000/yr if her estate is so large and she
doesn't need the money now.
I hope that helped.
JOE
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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