Welcome! | Ask A Question

 
 
Question

Asked 5/15/2010

What are the implications of selling your main residence when you have gifted half?

About 10 years ago, my mother put my sister's name on the deeds of her house and wrote a Will which left me her half and assumed that her house would eventually be divided equally between her 2 children. The reason my sister's name was put on to the deeds no longer exists. During this entire time my mother has continued to live at her home alone. Does this qualify as a gift with reservation? Recently, my mother has been considering selling her home, however, she has been given conflicting advice. She has been told that she may have to give half the money from the sale to my sister who will then have to pay capital gains tax. If this is true then is she liable for the capital gains tax rate that was in place at the time the gift was made or the rate at the time the sale is completed? My mother is now feeling extremely trapped and very confused as we all thought that if she has carried on living in her home this entire time (despite the gift being made more than 7 years ago) then it is still hers and that upon her death it would be entirely liable for inheritance tax. Until recently we were only concerned that her Will might not be sufficient as it currently stands to ensure her assets are divided equally between her 2 children. Please advise as we don't know how to proceed.

 
 
 
 
 
Answers

Answer 1/1 - Submitted 5/15/2010

If your sister is named co-owner of the property than your mother can not sell the house with the consent of your sister.

If your sister consents to the sale of the house, she is entitled to half of the proceeds and will have to pay capital gains tax, unless she buys another house which is her main residence.

Should your mother die before the sale of the house, then you sister is entitled to half of the value of he house and the others named in the will have to share the other half (which is your mothers legal half).

Inheritance tax would only have to be paid on your mothers half, as the other half already belongs to your sister.

I suggest you have ownership changed to your mothers name, then sell the house. What is not clear in your post, if your mother is looking for another property as her main home, otherwise she is liable for capital gains tax

 
 
 
 

Related Questions (Ask a New Question)

 
Estate or death taxes

My mother in law recently died leaving her daughters (2) her estate, it consisted of approx. $200,000 in cash, it is in a bank account held jointly with one daughter. the majority of the cash came from the sale of her residence. what are the tax implications, if any, for the daughters

See Answers

 
Death tax and capital gains

My husband's father passed away in 2006. he and his siblings are now going through a sale of property that they have inherited since their grandmother passed. w/ the sale of this property that they have inherited - what kind of taxes will they pay? looking at capital gains - it depends on your...

See Answers

 
My home is worth about $4,000,000 when i die if i leace it to my kids will they be subjected to 55% death tax on $3,000,000?

I understand that in 2011 the death tax will change to 55% over $1mm. if i have a house worth $4mm this would seem to mean that my kids would have to come up with $1,650,000 in cash within 9 months or be forced to sell my house. forcing a quick sale of a house this expensive would also lead to selling...

See Answers

 
Related Questions

Estate or death taxes


My mother in law recently died leaving her daughters (2) her estate, it consisted of approx....

 

Death tax and capital gains


My husband's father passed away in 2006. he and his siblings are now going through a...

 

My home is worth about $4,000,000 when i die if i leace it to my kids will they be subjected to 55% death tax on $3,000,000?


I understand that in 2011 the death tax will change to 55% over $1mm. if i have a house worth...

 

Is a settlement for a wrongfull death taxable?


A friend received an insurance settlement for $100,000.00 for the death of a child, in an...

 

What are the specifications of the death (estate) tax?


My father died recently and i need to know if i will have to pay a death tax this coming tax...

 

How do the death tax and health care reform in this country relate to one another?


In other words, i am in support of nationalized health care and also for the abolition of...

 

What is the point of having a death tax?


I just recently learned that your family gets charged a tax on your estate when you die. they...

 

Why does it take the irs so long to process a death tax return?


I've lost both of my parents now,. it was tough having to bury them and almost immediately...

 

If you have no cash and die, does the state take the death tax from the estate value? washington state?


Our state is raising death tax to 38% , and need info on what to do if one of us dies and...

 
 

See more Death Tax questions

 
 
 
 
 

Ask A Question

Ask a new question about
Death Tax: