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My mother is signing over her mobile home to myself and my sister.
Questions?
1. The mobile home was inherited by my mom from her mother. Would our tax basis be what my late grandmother paid for it when we eventually sell it?
2. My sister and I intend to give our uncle a portion of the proceeds from the eventual sale. Will he also pay a share of the capital gains if he's not officially on the title?
3. Our uncle is unofficially half owner, less $30k my mom already fronted him so it gets a little complicated. We plan to deduct the $30k he already received from his half and each pay taxes on what we profited. Will it be that simple or are we going to run into some snags with the IRS???
4. Would it be beneficial for us to buy the mobile home from our mother for a ridiculously low price instead of receive it as a gift? ......Would that change the tax scenario for us when we sell it?
Thank you for any advice or wisdom you might offer on these questions.
Keep in mind that taxes are regionally/locally determined, there is no single answer nationwide.
1. From my experience, the tax rate is re-assessed every time there is an ownership change.
2. Consult a CPA for an answer
3. Consult a CPA for an answer
4. Consult a CPA for an answer
Don't look to an internet forum for tax questions/direct advice.
It wasn't one of the questions you listed, but you should also worry about gift taxes. If you give more than $14,000 to somebody who isn't your spouse, it's probably taxable. If your uncle's part is unrecorded, you could be paying taxes on money you don't get. How you structure this kind of thing can matter a great deal and you really should seek professional advice.
Mobile homes don't appreciate in value. They depreciate. It may not be worth anywhere near what you think it is.
The first thing you want to do is to find out what the mobile is valued at. You also need to know if it is valued as real estate or as personal property. Check with your local tax assessor.
Once you know its value and how it is taxed, then you can speak to a tax professional for advice.
Speaking very broadly, and obviously not giving tax advice:
Who is going to own title to the property? Just your mother or is/will it be in both of your names? This is very important.
1. Your mother's basis in the property is typically the FMV at the date of your grandmother's death. The basis of a gift that has appreciated in value would be the basis of the donor. So if the property sells for more than your mother's basis, your basis in the property after the gift would be the same as her basis. The basis of a gift that has depreciated in value would be the FMV at the date the property was gifted to you.
2. If your uncle is not on the title and you gift him cash after the sale, you're just giving him cash. He pays no capital gains on property he didn't own. If the gift exceeds the untaxed maximum, you may need to file a gift tax return.
3. If your uncle is not on the title, and isn't liable for any capital gains tax on "his" portion of the sale, you can't deduct any amount given to him. So if the property sells for a gain of $100,000 and you and your mother are both on the title, then each of you would report a gain of $50,000. There would be no deduction for the $30,000 separately gifted to your uncle.
4. Buying it from your mother for a price very much below FMV will essentially land you in the same position as getting it as a gift. There's special rules about this to prevent tax avoidance.
My advice: Pull together all of the paperwork to figure out the basis when your mother took ownership. Get a current estimate of what the property is worth. Go talk to a CPA.
Where is the Mobile Home? Is it on an individual piece of property or in a trailer park? If on a seperate piece of property who owns the property? As someone else said Mobile homes are generally titled like a vehicle. But you need to talk to a lawyer, accountant, or estate planner who can give you proffesional advice based on your situation.
Thank you for all of your advice on this. We will have to find out the FMV at the time of my late grandmothers death for a starting point on the basis. It sounds like my uncle should also be on the title to pay his share of the taxes so we don't pay it for him. I will consult with a CPA before we go any further.
The mobile home is in Santa Cruz county and has appreciated quite a bit from the time my grandmother bought it. Not typical for mobile homes in most areas, but this is a very high COL area. The mobile home park is also a Co-op so each owner has a small stake in the land making it more desirable and helps to control the space rent.
Thanks again for your thoughts and advice!
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