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Old 09-04-2019, 10:09 AM
 
98 posts, read 17,465 times
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Quote:
Originally Posted by slowlane3 View Post
Sara...."Stepped-up basis" is an accounting term applied to capital gains on any asset, whether real property, stock investments, etc.

If your son is listed on your home's deed, then when he eventually after you die, sells your home and realizes a taxable "Capital Gain", he will be taxed based on the amount the home value has increased since YOU bought it.

On the other hand, if he is NOT on the deed, but only gets the house after you die, then when he finally sells it, the I.R.S. will tax him only on the amount the home's value has increased since the day he inherited it. Which will likely be a much smaller amount.

Similarly, if he inherits any stock shares from you, and much later sells them at a higher price, his capital-gain tax will be based on the stock's price (stepped-up value) on the day you died (likely advantageous to him) -- NOT on its price the day you originally bought it.
This is a portion of the county which never "steps up" luckily. In fact the land we bought has only went down in value the last 20 yrs. This off grid town never really holds it's own value, for as long as I've been alive. That's probably why the financial planner says to check in but even he knows this town well. Cops arrive in groups of 3-4, County hardly ever comes up there except once in a while to fix the road.

Even when they got landlines & fibre optic internet via a grant, it didn't draw anyone. Not one new person bought land and built a new home.

The road to the town is dangerous, people die every 5-7 years driving off of it. Every decade or so it is recorded someone "fell off the cliff" but townsfolk usually know who did it. Last guy was a child molester who was warned to leave but didn't. Just happened to fall to his demise. Violent crime, not just dope growing.

You can drive the other direction but it's an extra 55 minutes by the time you hit the freeway. Records shows the value of $50K with a small 2bdrm 1 bath home home recorded on it from 1900 or 1910. We paid 50K 3 yrs ago then tried to re-sell it for 75K for 2 yrs. Then decided to build on it so we are moving there. As we age, we want peace and no one bothers us there. We've been bike riding and friends with many in town not to mention going to high school with many of the town criminals. So essentially they are friends (but not really). They let us be.

I was told if it is under 150K, only an affidavid would need to be signed per Calif law.That seems to align with my research.

This is a "modest" homestead compared to other homes in the area, 50% or less in value so will not be seized by the Medicaid Estate Recovery Act if we incur huge nursing home bills we cannot cover. It's basically a very nice place being built, a wonderful homestead coming to fruition but not worth much on paper. In fact, the county doesn't even realize a home is being built there but it's on paper so that's all that counts. It's about 20 acres total.
That's how we planned it. It allows our kin to have somewhere to live if necessary, a nice area with a large reseivor and a huge river within 15 minutes. Living free. Sure, it's a drive to work but when your property tax is so low, solar & hydropower, and lots of privacy in the forest, it's do-able. It's at a higher elevation so not as hot

We saw the financial planner before all these recent wildfires. The largest one in history with more deaths than ever was 1 hr from here. Cancelling peoples homeowners insurance, PG&E cutting off power for hours at a time. Solar will be very desirable. The property has many artesian springs which are not recorded anywhere. During California's drought, the water reduced but never stopped. So hydropower may not work all yr, only solar.

Who knows, people may decide to go off grid. Solar powers becoming more popular and the millenials like fast internet & cheap abodes. Hence we'll check in with the financial planer and get a second opinion but a realtor lives next door. No doubt she'll keep us abreast of the real estate market. Pretty noticeable when new folks buy homes or property, it gets around town fast.

Last edited by SaraR.; 09-04-2019 at 10:34 AM..
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Old 09-04-2019, 12:48 PM
 
Location: SNA=>PDX 2013
2,723 posts, read 3,108,310 times
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Quote:
Originally Posted by ysr_racer View Post
Umm, yeah that's a pretty good one for most of us. Not many people in their late 60's/70's have living parents.

If you're young and don't have any children or a spouse, that's a topic for another thread
I guess I'm in the wrong for assuming most people visiting this board isn't necessarily 70-ish with kids/spouse. Unfortunately, I know too many people that have retired "young" and don't have kids, but surprisingly, have healthy parents and I was thinking about them, not necessarily the general population. So jealous of those retired youngin's.
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Old 09-04-2019, 12:59 PM
 
Location: SNA=>PDX 2013
2,723 posts, read 3,108,310 times
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Quote:
Originally Posted by SaraR. View Post
Alright maybe we need to see a second financial planner about the house. Thank you
Not directed at the OP, but I was curious, what type of attorney (or non-attorney) is considered a "pro"? I'm asking because SaraR said, "financial planner" and I'm thinking I probably would have seen an estate planning attorney instead.

I guess I found financial planner as a surprise; I didn't even think they would know beyond maybe stocks/retirement monies as that's all I've ever used them for.
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Old 09-04-2019, 01:12 PM
 
Location: SNA=>PDX 2013
2,723 posts, read 3,108,310 times
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Quote:
Originally Posted by fluffythewondercat
No children
No living parents
No one on either side of the family we would leave money or property to
No idea
Quote:
Originally Posted by Vicman View Post
No will means it goes to the state government

Not always.
The OP said, "No one on either side of the family we would leave money or property to", this sounds like they dont' want to leave it to anyone, but that they have other family/relatives that are living.

Intestate succession laws if your state would tell you, fluffythewondercat, who would inherit your stuff. If you did mean that you don't want certain someone's inheriting your stuff, then it's time to write up a will.

Where I live, it goes, kids, spouse, parent, siblings. And my brother would have to split his share with my two half-brothers, lol. After that, other family members, but I can't figure out how w/o reading all the legalese and since I have living relatives, I never looked into it.
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Old 09-04-2019, 01:15 PM
 
Location: SNA=>PDX 2013
2,723 posts, read 3,108,310 times
Reputation: 3169
Quote:
Originally Posted by slowlane3 View Post
Sara...."Stepped-up basis" is an accounting term applied to capital gains on any asset, whether real property, stock investments, etc.

If your son is listed on your home's deed, then when he eventually after you die, sells your home and realizes a taxable "Capital Gain", he will be taxed based on the amount the home value has increased since YOU bought it.

On the other hand, if he is NOT on the deed, but only gets the house after you die, then when he finally sells it, the I.R.S. will tax him only on the amount the home's value has increased since the day he inherited it. Which will likely be a much smaller amount.

Oh, so very glad my mom learned all this. They bought their house when it was $30k and now it's worth over $650k. Can you imagine paying CA taxes on that? Ouch! LOL. Good to know though and thank you for explaning.
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Old 09-04-2019, 03:47 PM
 
73,251 posts, read 73,051,102 times
Reputation: 50839
Quote:
Originally Posted by psichick View Post
Oh, so very glad my mom learned all this. They bought their house when it was $30k and now it's worth over $650k. Can you imagine paying CA taxes on that? Ouch! LOL. Good to know though and thank you for explaning.
now you see why we said your plan for adding them to the deed was a bad idea . if a planner told you to do this you need a new planner .
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Old 09-04-2019, 03:50 PM
 
Location: Rust'n in Tustin
2,433 posts, read 2,517,421 times
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Quote:
Originally Posted by psichick View Post
. Good to know though and thank you for explaining.
Can you imagine how much you'd learn if you sat down with an attorney?
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Old 09-04-2019, 03:53 PM
 
73,251 posts, read 73,051,102 times
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if anyone thinks the price of good legal advice is expensive , you cant afford free
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Old Yesterday, 01:02 AM
 
9,054 posts, read 8,256,104 times
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In Montana we have what allows us to deed the home and contents including cars to an heir/heirs, and file today. At time of death heir files death certificate, and transfer of title is made, but can be voided before our deaths. Bank accounts etc., are POD accounts. All bills are to one small account, all auto pay. Funeral expenses are prepaid.

All set up so there is no probate, and is just below any taxes due so all is needed are death certificates to get it all cleaned up in a week, without all the normal expenses.
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Old Yesterday, 03:23 AM
 
73,251 posts, read 73,051,102 times
Reputation: 50839
Quote:
Originally Posted by oldtrader View Post
In Montana we have what allows us to deed the home and contents including cars to an heir/heirs, and file today. At time of death heir files death certificate, and transfer of title is made, but can be voided before our deaths. Bank accounts etc., are POD accounts. All bills are to one small account, all auto pay. Funeral expenses are prepaid.

All set up so there is no probate, and is just below any taxes due so all is needed are death certificates to get it all cleaned up in a week, without all the normal expenses.
a lot of states have that . but it is not actually adding them to the deed . it is allowing it to pass to them like a beneficiary after death
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