Gift or Inherit

By
Real Estate Broker/Owner with Morningside Homes, LLC 720-231-5200 DRE# ER300941

 Gift or Inherit


Transferring the title of a home from one person to another may seem simple but it could have a significant tax implication.

When a person inherits property, the basis is "stepped-up" to fair market value at the time of the decedent's death. On the other hand, a gift has a carry-over basis which means that the recipient receives the unrealized gain also.gift or inheritance

As an example, let's say an elderly parent, in an attempt to get their affairs in order, gives their home to their adult child. The rationale might be that they are the sole beneficiary and will get the property eventually. In an effort to settle things early, unnecessary income tax may be incurred.

If the home was purchased for $20,000 and worth $100,000 at the time of transfer, there is a possible gain of $80,000. However, if the adult child inherited the property at the time of the parent's death, their new basis would be $100,000 or the fair market value at the time of death and the possible gain would be zero.

This is meant to be an example and many other variables could be involved. If you're concerned about a situation, you should seek specific advice from a tax professional.

As always, I'm here to help you as your real estate professional.
           

Posted by

Buy or Sell with Patty Clark              Denver/Aurora Co. and surrounding areas 

Chris and Patty

    Helping Families Move with Care

  If you would like to be sent properties on a daily or weekly  basis just call or email me and let me know your wants and  needs. A match will be made with a home you love and with  monthly payments you can afford. I specialize in first time                       home buyers and sellers who are ready to make a move.

                                                    

 

Morningside Homes, LLC
patty@morningsidehomes.com

www.morningsidehomes.com
Cell: 720-231-5200                       CRS,GRI,WCR,SFR,CNE, MRE

 

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Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

Patty,  This is something to think about.  Very good information for someone thinking about gifting their home to their heirs.

Jul 24, 2012 12:37 AM #1
Rainmaker
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Patty Clark
Morningside Homes, LLC 720-231-5200 - Denver, CO
Helping Families Move with Care

Belinda, You would think gifting a home to a child would be a great act of kindness..but the IRS makes everything very complicated.

Jul 24, 2012 01:12 AM #2
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Rainmaker
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Patty Clark

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