[Vleka]

I need some advice. My mothers home is also in my name. She has passed away and I need to sell her house and split the money three ways with my siblings. What is the best way to do that without everyone getting dinged by taxes? Can I gift it to them? Can I just deposit my share in the bank or do I have to reinvest it in another house? I would appreciate any advice you can give me. Thank you.

[retiredguy123]

Originally Posted by Vleka

I need some advice. My mothers home is also in my name. She has passed away and I need to sell her house and split the money three ways with my siblings. What is the best way to do that without everyone getting dinged by taxes? Can I gift it to them? Can I just deposit my share in the bank or do I have to reinvest it in another house? I would appreciate any advice you can give me. Thank you.

You should ask tax expert or estate attorney this question. But, if the entire house is an inheritance (stated in a will) to all three siblings, then there are no taxes due. But, if you inherited the entire house, and you are giving the other siblings a share of the proceeds as a gift, your siblings would not owe any tax, but you may owe an estate tax, depending on the amount of your total estate. To eliminate the estate tax, you could deposit the money into your bank account, and give them $16,000 per year each until all the money has been gifted. Another way to do it is to lend them their share with an official loan document, and then forgive $16,000 of the loan every year as a gift. This would ensure that your estate tax liability would not increase.

[Stu from NYC]

You need to speak to a tax expert/lawyer on how to do this.

[Boomer]

I am not a CPA or an attorney, but you definitely need to meet with one. When it comes to estate tax, attorneys often refer to an accountant anyway — or some law firms have them in-house. I would not use a financial planner for this — unless they also happen to be tax accountants. This is most likely beyond regular tax preparers.

(I think there are places where lawyers take a percentage of the entire estate — not just their hourly. I don’t know how that works though or if it varies by state and/or custom. But it’s good to be aware of the possibility.)

I doubt that estate tax will be an issue because very few estates exceed the Federal exemption which is 12.06 million for 2022 and I don’t think Florida has a state estate tax.

In 1997 the tax law changed to the benefit of those selling their primary residence. Before that time, investing in a bigger house was the only way to avoid capital gains tax on profit.

The 1997 tax law change was also when the taxpayer-friendly exemption of $250,0000/$500,000 meant no cap gains tax on profit below those single/married amounts if the owner had lived in the house for 2 years. . .actually I think it’s two out of 5 years before selling. (Small builders and small flippers love this 1997 tax law change — along with the rest of us primary residence homeowners. It was that 1997 tax law change that allowed a lot of people to downsize — and to happily get a tax-free chunk of change at the closing table. This can be especially beneficial to retirees.)

But yours is not your primary residence, so therein lies the rub — or one of them anyway. If you need to close the gap between the house’s purchase price and selling price, see if you can find records of any improvements. If you use a real estate agent, I am pretty sure their fee can become part of closing that gap. (But, I reiterate — I am not an attorney or an accountant.)

The gift tax exemption for 2022 is $16,000 per recipient. But I think some tax forms might need to be filed anyway because of the lifetime gift exemption — not sure though.

This could get a little complicated. I am assuming the type of deed means you are now the full owner of the house, making you the one who will have to take any capital gains tax hit. Your siblings will not. I don’t know if living in the house for 2 years, as your primary residence, would help you or not. That probably would involve the bigger picture. And I am not sure how you establish cost-basis on this anyway. Better ask though.

I better stop now, other than to advise you to get professional advice as soon as you can. Write down all the questions you have and take them with you to your appointment. Going in prepared and taking notes is going to help you get a handle on this situation.

Good luck to you — and I hope your relationship with your siblings is a really good one. They say you never know someone until you have to share an estate with them. (And please do not comment on that here. And do not give any numbers for amounts involved. It’s none of our business.)

Boomer

PS: I can pretty much guarantee that you will get contacted by private message here, with inquiries about the house you plan to sell. But your first order of business is to get professional advice. (If it were me, I would start with a CPA.)

PPS: Also, please keep in mind that it is quite possible that I have no idea what I am talking about.

[EdFNJ]

And yet another first post from someone who joined this forum 5 years ago. Where have all these posters been all these years!? Welcome back! Anyway, an internet forum isn't the place to go for that type of advice. If I told you I was a tax accountant and estate attorney, would you do what I said? Hopefully not but I'd bet you are aware of that.

[Boomer]

Originally Posted by EdFNJ

And yet another first post from someone who joined this forum 5 years ago. Where have all these posters been all these years!? Welcome back! Anyway, an internet forum isn't the place to go for that type of advice. If I told you I was a tax accountant and estate attorney, would you do what I said? Hopefully not but I'd bet you are aware of that.

Aw, c’mon, Ed, please lighten up. Sometimes people do not know where to start and asking old (er, more experienced) people can be a way to at least get a handle on where to begin — by getting ideas for what kind of questions to ask a professional.

Picking up a little of the pertinent vocabulary, and knowing what you don’t know, before going into a meeting with a professional, really can help. Nothing wrong with doing a little homework first.

I always preface my posts on such matters as this one by telling the poster who asked that I am not the kind of professional they need. But, yeah, I give them some starting points if I can and try to send them off in the right direction.

And, I can never resist the chance to write an Ode to the Tax Relief Act of 1997 — that sure made a big difference in our real estate transactions with primary residences since.

As far as the date of joining goes, maybe they had no reason to post before. (Not everybody likes to goof off writing posts like I do when I am at home procrastinating instead of doing useful stuff.) Also, I sometimes wonder if there are those who do not want to be told to Google or to pay for a professional or get other snarky answers to their posts.

Also, as far as spotting join dates is concerned, I don’t wonder about the old join dates. I sometimes wonder though about the more recent ones — but only if the newer poster seems to have showed up only to pursue their one-track agenda. They stand out to me like sore thumbs. Some of those one-note samba posters are not as new as they want us to think they are though. Patterns of writing can look awfully familiar sometimes. So I guess everybody’s got somethin’ they see — if they have been around here long enough.

Oh well, I need to shut up now because I still have tax stuff to get together for us — to give to a CPA.

Boomer

[manaboutown]

A competent estate attorney can give you the answers. How does the deed read? Lady Bird, TOD, JTWROS, TinC, and so on? Any will? Too many unknowns here for me to even comment.

[dewilson58]

Originally Posted by manaboutown

A competent estate attorney can give you the answers. How does the deed read? Lady Bird, TOD, JTWROS, TinC, and so on? Any will? Too many unknowns here for me to even comment.

OP...............This is the only post you need.

[Packer Fan]

Some good advice - see a Tax focused CPA or Lawyer.
However, anyone reading this - YOU DON'T WANT TO CO-OWN A HOUSE WITH YOUR PARENTS. Then when they die, you just sell the house at the stepped up tax value and split the money. Not a big deal. When you are the owner also, then the value does NOT get stepped up so there may be capital gains issues, especially if Mom owned the house for a long time. If you lived there with her, you might skip this but then you have gift issues as stated previously.

If you own a home with your parents do a quit claim deed and get your name OFF the property.

[DAVES]

Originally Posted by Boomer

I am not a CPA or an attorney, but you definitely need to meet with one. When it comes to estate tax, attorneys often refer to an accountant anyway — or some law firms have them in-house. I would not use a financial planner for this — unless they also happen to be tax accountants. This is most likely beyond regular tax preparers.

(I think there are places where lawyers take a percentage of the entire estate — not just their hourly. I don’t know how that works though or if it varies by state and/or custom. But it’s good to be aware of the possibility.)

I doubt that estate tax will be an issue because very few estates exceed the Federal exemption which is 12.06 million for 2022 and I don’t think Florida has a state estate tax.

In 1997 the tax law changed to the benefit of those selling their primary residence. Before that time, investing in a bigger house was the only way to avoid capital gains tax on profit.

The 1997 tax law change was also when the taxpayer-friendly exemption of $250,0000/$500,000 meant no cap gains tax on profit below those single/married amounts if the owner had lived in the house for 2 years. . .actually I think it’s two out of 5 years before selling. (Small builders and small flippers love this 1997 tax law change — along with the rest of us primary residence homeowners. It was that 1997 tax law change that allowed a lot of people to downsize — and to happily get a tax-free chunk of change at the closing table. This can be especially beneficial to retirees.)

But yours is not your primary residence, so therein lies the rub — or one of them anyway. If you need to close the gap between the house’s purchase price and selling price, see if you can find records of any improvements. If you use a real estate agent, I am pretty sure their fee can become part of closing that gap. (But, I reiterate — I am not an attorney or an accountant.)

The gift tax exemption for 2022 is $16,000 per recipient. But I think some tax forms might need to be filed anyway because of the lifetime gift exemption — not sure though.

This could get a little complicated. I am assuming the type of deed means you are now the full owner of the house, making you the one who will have to take any capital gains tax hit. Your siblings will not. I don’t know if living in the house for 2 years, as your primary residence, would help you or not. That probably would involve the bigger picture. And I am not sure how you establish cost-basis on this anyway. Better ask though.

I better stop now, other than to advise you to get professional advice as soon as you can. Write down all the questions you have and take them with you to your appointment. Going in prepared and taking notes is going to help you get a handle on this situation.

Good luck to you — and I hope your relationship with your siblings is a really good one. They say you never know someone until you have to share an estate with them. (And please do not comment on that here. And do not give any numbers for amounts involved. It’s none of our business.)

Boomer

PS: I can pretty much guarantee that you will get contacted by private message here, with inquiries about the house you plan to sell. But your first order of business is to get professional advice. If it were me, I would start with a CPA.)

PPS: Also, please keep in mind that it is quite possible that I have no idea what I am talking about.

Far as lawyers taking a percentage of the estate. I confess, I have a very negative view of attorneys and that is based on experience with several.

See the situation. You hire someone and sign so much per hour. Who keeps track of the hours-they do. Verify the hours-you can't.

The attorney for my mother's estate. At the end he sent a bill for if, I recall like 5,000 no statement attached. When we demanded a statement he was not happy-don't you trust me? On review, he charged us several hours at $300 an hour to instruct named assistant who he also billed at $200 an hour. Yup, $500 an hour. And who was his assistant. A little research. He was a law STUDENT working for free to add to his resume. Honor? Ethics? My sister wanted this attorney. I expect my brother in law, who knew this guy was getting a piece. I had a flat rate estimate for 3,000 from another attorney. I explained it all to this atty and told him I was going to send it all to the bar for review. HE CUT HIS BILL TO THE 3,000.

For we non-attorneys that is grand larceny or perhaps attempted grand larceny. Our legal system. Terms like YOUR HONOR. It is on the business card. Sadly, often the only place it is.

[Boomer]

. . .

[Boomer]

Originally Posted by Packer Fan

Some good advice - see a Tax focused CPA or Lawyer.
However, anyone reading this - YOU DON'T WANT TO CO-OWN A HOUSE WITH YOUR PARENTS. Then when they die, you just sell the house at the stepped up tax value and split the money. Not a big deal. When you are the owner also, then the value does NOT get stepped up so there may be capital gains issues, especially if Mom owned the house for a long time. If you lived there with her, you might skip this but then you have gift issues as stated previously.

If you own a home with your parents do a quit claim deed and get your name OFF the property.

Not only that, but while the parent is still alive, if the co-owning kid gets into a legal problem, house ownership might be in jeopardy.

[retiredguy123]

Originally Posted by DAVES

Far as lawyers taking a percentage of the estate. I confess, I have a very negative view of attorneys and that is based on experience with several.

See the situation. You hire someone and sign so much per hour. Who keeps track of the hours-they do. Verify the hours-you can't.

The attorney for my mother's estate. At the end he sent a bill for if, I recall like 5,000 no statement attached. When we demanded a statement he was not happy-don't you trust me? On review, he charged us several hours at $300 an hour to instruct named assistant who he also billed at $200 an hour. Yup, $500 an hour. And who was his assistant. A little research. He was a law STUDENT working for free to add to his resume. Honor? Ethics? My sister wanted this attorney. I expect my brother in law, who knew this guy was getting a piece. I had a flat rate estimate for 3,000 from another attorney. I explained it all to this atty and told him I was going to send it all to the bar for review. HE CUT HIS BILL TO THE 3,000.

For we non-attorneys that is grand larceny or perhaps attempted grand larceny. Our legal system. Terms like YOUR HONOR. It is on the business card. Sadly, often the only place it is.

I would never hire an attorney by the hour.

[Jayhawk]

Originally Posted by retiredguy123

I would never hire an attorney by the hour.

I stayed in a Holiday Inn Express last night, but I'd still recommend you get a professional opinion from an attorney. Could be the best money you will spend.

[Boomer]

Originally Posted by retiredguy123

I would never hire an attorney by the hour.

Never say never, retiredguy123.

I knew there was a percentage thing in Ohio, but I did not know what it was, so I looked it up. Yessirreebob, I went straight to the Google. I sure did. Just like I’m supposed to. . .right.

I read on some lawyer’s site that Ohio Law says that legal fees must be “reasonable” and 2 - 2.5 % is deemed reasonable as a percentage of the estate for the lawyer.

Sometimes certain firms, perhaps the hoity-toity ones, want and get those percentages and they hold on to that, while others will do it by the hour.

I don’t know about Florida. But wherever it is, it pays to know how that fee works.

”My mama told me — you better shop around.”

Boomer