NASSAUSUFFOLK

 View Only

  • 1.  Tax On Sale Of Jointly Owned House

    Posted 03-28-2023 09:10 PM
    Hi All, I hope your tax season is going well!

    Parents purchased a home in 1994 for $250,000 with joint ownership. In 2006, they added the names of their 2 sons to the deed. Each person owned 1/4. No gift tax return was filed, but they did get the house appraised for $500,000. They don't have a lot of other assets and were, and still are, well under the lifetime gift exclusion.

    The dad passed away in 2022. They sold the house within the 6 months and opted for the alternative valuation date. The house was sold by the family. The sales price was $675,000.

    The mom can use her sec 121 exclusion so she has no tax on her portion of the gain. The 2 sons did not live with the parents. Can the sons use the appraisal to get a stepped up basis at the time of the gift? Can the dad's 121 exclusion be used even though this house was not in a trust?

    Thank you for any help you can provide!
    Mary Casola

    ---------------------------------
    Mary Casola
    The Casola Group Ltd
    N. Bellmore NY
    ---------------------------------


  • 2.  RE: Tax On Sale Of Jointly Owned House

    Platinum Most Valuable Member
    Posted 03-28-2023 09:34 PM

    No question mom gets a step up on her inherited share.  I am under the impression that there would have to be a transfer caused by the death in order to get the step up.  It seems that by the way you present it, they already owned their share before death. Or to say it like  " the gift was complete" at the time of deading

    Most trusts structure this type of scenario by taking a life estate, which is no more than the right to live in the house for the parents life time.

     

    I have research  done on a child being placed on the dead  for simplicity when the parents pass.  And then in that case, there would be a step up..    

     

    Id really like to see how some of our estate professional develop this.  I think many would be interested in your topic.

    If you do get an answer, please keep me in the loop.

     

     

    Abby Alhante,  CPA

     

    Kurcias  & Alhante, LLC  CPAs

    525 Broadhollow Road   Suite 104

    Melville NY  11747

    516.829-5890  Fax 516-829-3976

    Mobile 516-381-9301

    AbbyA@KurciasAlhanteCPAs.com

    ( E mail response preferred )

     




    Original Message


  • 3.  RE: Tax On Sale Of Jointly Owned House

    Posted 03-29-2023 02:03 AM
    Gifts do not get " stepped up" basis as inherited proprty do, but get carryover basis,that is,the gifters basis, plus any gift tax paid on the transfer if any, limited to FMV at the time,,,so,, the father's portion would go to the mother as inheritance presumably,,,she would get step up on his portion...shewould have no tax liability on the transaction,,,1/4 due to 121 exclusion and one 1/4 due to thestep up basis just prior to sale,,,
    The sons portions would not qualify for step up basis and would not qualify for 121 exclusion, so each of them would have gain, as they did not reside there so don't qualify as 121 exclusion and their basis would be carryover basis for the parents
    suggest reading thru sec 121 for clarification and rules regarding basis to recipient on gift.\




    Original Message


  • 4.  RE: Tax On Sale Of Jointly Owned House

    Silver Most Valuable Member
    Posted 03-29-2023 09:29 AM

    Howard,

    I agree with you re: the sons not entitled to sec 121 exclusion, but I don't agree with you entirely about the sons' basis. It's true what you said about basis when there is a gift, but the OP didn't say if there was a will saying the father's share was to bequeath to the mother. If there is a will where the mother inherits the father's share then yes I would agree with your assessment of the sons not getting a "stepped up" basis, but if there wasn't a will I would think the sons would be entitled to the portion of the stepped basis. Agree/Disagree? 



    ------------------------------
    Dennis Lee
    ------------------------------

    Original Message


  • 5.  RE: Tax On Sale Of Jointly Owned House

    Posted 03-29-2023 09:55 AM
    Thank you all for responding!!! They did this to avoid probate. There weren't a lot of other assets.
    Mary

    ---------------------------------
    Mary Casola
    The Casola Group Ltd
    N. Bellmore NY
    ---------------------------------



    Original Message


  • 6.  RE: Tax On Sale Of Jointly Owned House

    Posted 03-29-2023 09:57 AM
    To answer the question...there was no will. Thanks again!!

    ---------------------------------
    Mary Casola
    The Casola Group Ltd
    N. Bellmore NY
    ---------------------------------



    Original Message


  • 7.  RE: Tax On Sale Of Jointly Owned House

    Posted 03-29-2023 10:07 AM

    It was stated that the property was put into 4 names. At that point it was stated that a gift took place but no gift tax returns were filed. I based my answer on what was stated. I am not going to look for more detail or look at what if situations. I really don't want to be going any further into this. There can possibly be different aspects bases on other info not stated., but the answer I gave is based on what was stated in the question posted.



    ------------------------------
    Howard Silverman
    Enrolled Agent
    silvermantaxconsult@gmail.com
    516-302-5455
    ------------------------------

    Original Message


  • 8.  RE: Tax On Sale Of Jointly Owned House

    Silver Most Valuable Member
    Posted 03-29-2023 11:35 AM

    There are many considerations.  This is a classic example of what NOT to do.  The family may have agreed to permit mom and dad to stay in the property without payment of rent.  Section 2036 may apply, and all factors must be reviewed and documented. A basis review may also include family affidavits.

     

    Very truly yours,

     

    ROBERT S. BARNETT

     

     

    Long Island Office:

    487 Jericho Turnpike (NEW ADDRESS!)

    Syosset, New York 11791

    516-931-8100

    Fax: 516-931-8101

     

    New York City Office:

    1385 Broadway, 12th Floor

    New York, New York 10018

    212-661-1144

    Fax: 212-643-1330

     

    www.cbmslaw.com

    _______________________
    Confidentiality Notice: The information contained in this e-mail and any attachments may be legally privileged and confidential. If you are not an intended recipient, you are hereby notified that any dissemination, distribution or copying of this e-mail is strictly prohibited. If you have received this e-mail in error, please notify the sender and permanently delete the e-mail and any attachments immediately. You should not retain, copy or use this e-mail or any attachment for any purpose, nor disclose all or any part of the contents to any other person. Thank you.

     

     



    Disclaimer

    The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or taking action in relation of the contents of this information is strictly prohibited and may be unlawful.

    This email has been scanned for viruses and malware, and may have been automatically archived by Mimecast Ltd, an innovator in Software as a Service (SaaS) for business. Providing a safer and more useful place for your human generated data. Specializing in; Security, archiving and compliance. To find out more Click Here.




    Original Message


  • 9.  RE: Tax On Sale Of Jointly Owned House

    Posted 04-09-2023 06:58 PM
    Thank you all for your great insight!!!

    ---------------------------------
    Mary Casola
    The Casola Group Ltd
    N. Bellmore NY
    ---------------------------------



    Original Message


  • 10.  RE: Tax On Sale Of Jointly Owned House

    Posted 04-09-2023 07:03 PM
    Scary isn't it that we are thinking about this stuff on a holiday evening at 7PM....sort of sad....



    Original Message


Discussion Disclaimer

The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.