Advice about my father's house: Transferring the house to my name (mortgage, mortgage)

[titaniummd]

My father was recently diagnosed with cancer. He has a small house in the Charleston Metro region that he has paid off 10 years ago.

Can my father transfer the house to my name? If so, what is the tax implication?

Am I better off 'buying the house', financing it and using it as a tax write off from the mortgage interest?

Either way, I plan to rent it out and then sell it, when and if the market turns around.

If I am on the wrong track here on my thinking, please guide me in the correct direction.

[MikeJaquish]

No matter what advice you get here, specific tax and legal advice from a financial planner or tax accountant and attorney will be needed. That might be one and the same person, but they will respond to more details than you should give here.

[jaindow]

I agree that you need tax and legal advice. However, I do wonder why you want to transfer the house to yourself while he is alive rather than simply making sure he has an estate plan.

If you are thinking of transferring the house now in order to avoid probate, there are other ways to do that such as having your father set up a living trust now while he is still alive. Look for a good Estate Planning Attorney and have him/her guide you.

[bigtrees]

When you transfer the title of the house from your fathers name (listed in his name only) to your name, it is considered a gift by the IRS unless he is paid fair market value.

Assuming that you won't pay anything, your father will have to pay gift taxes on the property. He will need to have an apprasial done to show what the fair market value is in case the IRS audits his estate. You can read the IRS guidance on gift and estate taxes and they cover transfer of real estate specifically.

For estate planning purposes, you will not avoid estate taxes (legally) by transferring title now as opposed to later.

[mathjak107]

if you transfer it to your name it would be a mistake because you will hold the cost basis of your father for tax purposes, you may or may not owe capital gains taxes on it when you sell it .... if you inhereit it then you get a step up to todays value..... i would put it in a trust so it dosnt have to go thru probate though...... im not a lawyer so i can only give you some basics

[mathjak107]

there is no tax advantage to taking a mortgage, in fact just the opposite,... you will pull about 3 bucks in interest out of the ole piggy bank and get back 1 as a deduction.... makes no sense unless you can achieve a greater after tax return on the money then you are paying in interest after tax deduction...... not easy to do for the last decade with the markets performing so poorly and interest rates being paid so low


another mistake is if your father lives a long time but needs money he can reverse mortgage the house, if he gives it to you he cant..

theres other issues also, if you marry and divorce your ex can take the house or part of,,,, if your in an accident and at fault your fathers house can be lost if your sued

[Janecj]

Mike is absolutely right. You need legal and tax advice. I can tell you from personal experience, even if you think you have all your ducks in a row, something seems to always come up. I had an attorney and still didn't get the right information. Get 2 attorneys. One in the state where you live and another in the state where the property resides. Good luck!

[CAugust]

My father put his home in a Living Estate years ago. The home was in both our names, but he still had all tax advantages that seniors got and all bills came to him. It basically meant that while I was on the deed, I could not sell it without his permission. You will also need a health proxy and power of attorney. All the advice here is sound, get a good estate attorney to do everything. In case your father needs specialized care that his insurance doesn't cover the home can have a lein put on it in the event you sell it. There are a lot of issues surrounding this - go to a very good estate attorney and bring a huge list of questions....

All the best to your father....

[mathjak107]

make sure you see an actual estate attorney and not some general practioner ...especially if there are step children or brothers and sisters...
and even then there can be issues....

how about a refinance closing that was kabashed by the title company because the will said " i leave my house to my child beth..... well it was missing one word... the word ONLY" as in only child....

closing was stopped, i had to pay the co-op lawyer , the bank lawyer and lost the lower interest rate because we had to get affidavitts from relatives there were no other children and reshedule a closing

[2bindenver]

Always better tax-wise to inherit property - the property gets current market value - not the original purchase price plus upgrades.