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I'll try to make this as short as possible, and may have to end up going to a cpa or something, but I know there are a lot of pretty knowledgeable people on here. So, if it is a simple answer, I could save myself some money. My wife's grandmother passed 3 years ago and left her a property with a home on it. It's worth 200,000-300,000. It's not as simple as it sounds, the parcel is not by itself, and is part of a larger 60 acre piece of land with other relatives living on there own parcel. Also, her grandfather can live there for the rest of his life. It wasn't left to him to avoid having to transfer the deed twice.
Got all that out of the way, so after a few years of procrastination by relatives and red tape by way of the county (big surprise), the deed was finally transferred last year. So this is the first year the property is in her name. So, what do we have to do with this property pertaining to this years taxes? Some years if there is extra money left over she may get $1,000-2,000 from rent(farmland). The land is paid for, so I'm not to familiar with what to report to the IRS, and I sure as heck don't want them coming down on us for something I have no idea about. Any advice,knowledge pertaining to this?
My wife's grandmother passed 3 years ago and left her a property with a home on it.
It's worth 200,000-300,000.
...this is the first year the property is in her name.
So, what do we have to do with this property pertaining to this years taxes?
Property taxes? It's her property so she pays the bill.
Inheritance taxes shouldn't be an issue.
Quote:
Some years ...she may get $1,000-2,000 from rent (farmland).
...not too familiar with what to report to the IRS...
Whoever is collecting and distributing that rent money should include a 1099 or K1.
Based on how *that* is reported dictates what goes on her tax return (or not).
I'll try to make this as short as possible, and may have to end up going to a cpa or something, but I know there are a lot of pretty knowledgeable people on here. So, if it is a simple answer, I could save myself some money. My wife's grandmother passed 3 years ago and left her a property with a home on it. It's worth 200,000-300,000. It's not as simple as it sounds, the parcel is not by itself, and is part of a larger 60 acre piece of land with other relatives living on there own parcel. Also, her grandfather can live there for the rest of his life. It wasn't left to him to avoid having to transfer the deed twice.
Got all that out of the way, so after a few years of procrastination by relatives and red tape by way of the county (big surprise), the deed was finally transferred last year. So this is the first year the property is in her name. So, what do we have to do with this property pertaining to this years taxes? Some years if there is extra money left over she may get $1,000-2,000 from rent(farmland). The land is paid for, so I'm not to familiar with what to report to the IRS, and I sure as heck don't want them coming down on us for something I have no idea about. Any advice,knowledge pertaining to this?
So...it's your wife's property but grandpa has a "life estate" in it. The lifetime owner of the property (Gramps) with absolute and exclusive right to use of the property during their lifetime, which expires automatically upon his death.. The life tenant (Gramps) remains responsible for real estate taxes and maintenance of the property...and is also entitled to all income (this includes if Gramps moved to a nursing home and rented out the house...the rent collected would be his).
Property taxes? It's her property so she pays the bill.
Inheritance taxes shouldn't be an issue.
Whoever is collecting and distributing that rent money should include a 1099 or K1. Based on how *that* is reported dictates what goes on her tax return (or not).
Not necessarily. The transaction that took place is what dictates what goes on the tax return. 1099s are often incorrect; don't match the taxpayer's method of accounting or can be treated in different ways depending on the situation.
So...it's your wife's property but grandpa has a "life estate" in it. The lifetime owner of the property (Gramps) with absolute and exclusive right to use of the property during their lifetime, which expires automatically upon his death.. The life tenant (Gramps) remains responsible for real estate taxes and maintenance of the property...and is also entitled to all income (this includes if Gramps moved to a nursing home and rented out the house...the rent collected would be his).
Makes sense, he basically gets the benefits and responsibility of the property for the rest of his life even if the deed isn't in his name. Anything we need to report on our tax returns coming up soon?
Makes sense, he basically gets the benefits and responsibility of the property for the rest of his life even if the deed isn't in his name. Anything we need to report on our tax returns coming up soon?
nope. Nothing has really changed other than the deed...and your wife has no control over the property until Grandpa passes on...so really she has no burden.
Life estates are a grand way to get money out of an estate. More than likely this was done as part of a comprehensive estate plan. It might be time for your wife to sit down with one of the elders in the family to discuss what this plan is. Most planners encourage open and frank discussion so it's not unreasonable to ask for a family meeting.
Good luck.
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