Best way to Transfer property

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masonstone
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Best way to Transfer property

Post by masonstone »

What is the best way to transfer a property from my father to myself and avoid paying taxes. The property is worth about 800K and is located in California.
chessknt
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Re: Best way to Transfer property

Post by chessknt »

Title company should be able to help.
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knpstr
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Re: Best way to Transfer property

Post by knpstr »

Transferring property to you AND avoiding taxes?

Sounds to me like he will have to gift it to you and use part of his lifetime estate tax exemption on it.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
Gill
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Re: Best way to Transfer property

Post by Gill »

By deed if it is real estate and file a gift tax return. Get an appraisal. Your basis will be his basis.
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Thecallofduty
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Re: Best way to Transfer property

Post by Thecallofduty »

masonstone wrote: Sat Feb 16, 2019 9:24 am What is the best way to transfer a property from my father to myself and avoid paying taxes. The property is worth about 800K and is located in California.
Quitclaim deed?
-thecallofduty
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masonstone
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Re: Best way to Transfer property

Post by masonstone »

Thecallofduty wrote: Sat Feb 16, 2019 9:47 am
masonstone wrote: Sat Feb 16, 2019 9:24 am What is the best way to transfer a property from my father to myself and avoid paying taxes. The property is worth about 800K and is located in California.
Quitclaim deed?
Who would do a quitclaim deed?
Gill
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Re: Best way to Transfer property

Post by Gill »

masonstone wrote: Sat Feb 16, 2019 10:17 am
Who would do a quitclaim deed?
An attorney.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
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Watty
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Re: Best way to Transfer property

Post by Watty »

masonstone wrote: Sat Feb 16, 2019 9:24 am What is the best way to transfer a property from my father to myself and avoid paying taxes. The property is worth about 800K and is located in California.
I am not a tax pro but if this is a gift then I am pretty sure that you would get his cost basis so that if you sold it ten years from now you might owe a lot in capital gains taxes even if the house is still worth 800K then. It could be even more complicated if he has used it as a rental property.

If he leaves it to you in his will then you would likely get it at a stepped up cost basis and never need to pay the taxes on that capital gains.

If he is older then you might want to talk to a lawyer who handles elder care law to find out what they would recommend. It could be that putting the house into a trust that you would get some day might make sense.
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CAsage
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Re: Best way to Transfer property

Post by CAsage »

The best way would be for him to create a Transfer on Death Deed and record the title of the house that way, and for you to inherit it. Then you would not a) need any probate to transfer the title and b) owe no taxes on his presumed capital gains because you would inherit it. Need more details about the circumstances - but the "best way" is to inherit. Not gift, then you owe taxes when you sell.
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Gill
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Re: Best way to Transfer property

Post by Gill »

This is a very recent thread. Does this tie in with the current plan to buy a $1.5 million dollar house?
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knpstr
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Re: Best way to Transfer property

Post by knpstr »

CAsage wrote: Sat Feb 16, 2019 10:45 pm The best way would be for him to create a Transfer on Death Deed and record the title of the house that way, and for you to inherit it. Then you would not a) need any probate to transfer the title and b) owe no taxes on his presumed capital gains because you would inherit it. Need more details about the circumstances - but the "best way" is to inherit. Not gift, then you owe taxes when you sell.
The reason you do pay tax on the inheritance is because of the estate tax exemption. Why not gift it now and use part of the exemption in the form of the unified credit?

"As of 2016, the IRS allows you to give $14,000 annually to anyone you like, tax-free. If you’re married, you and your spouse can each give $14,000. However, if the value of the gift exceeds the annual exclusion amount, you, as the donor, must file a gift tax return (Form 709) to report the gift. As discussed earlier, you will not likely owe any gift tax if you have not yet used up your unified gift and estate tax exemption."

It is using the exact same exemption to avoid taxes in either case, so why not use the unified credit now? Then you don't have to wait for your parents to die to receive the property (if the property wants to be transferred now).

You would potentially owe taxes when you sold (since the basis is not stepped up) unless something else in the future was done like now. But you could still transfer the property today, tax-free.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
Bobby206
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Re: Best way to Transfer property

Post by Bobby206 »

I would think your team of tax advisors could answer this question.
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CAsage
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Re: Best way to Transfer property

Post by CAsage »

knpstr wrote: Tue Mar 19, 2019 9:01 pm It is using the exact same exemption to avoid taxes in either case, so why not use the unified credit now? Then you don't have to wait for your parents to die to receive the property (if the property wants to be transferred now).

You would potentially owe taxes when you sold (since the basis is not stepped up) unless something else in the future was done like now. But you could still transfer the property today, tax-free.
I believe what you are doing there is deferring the taxes, not avoiding them. The step up in inheritance actually makes the taxes disappear. Otherwise.... The piper just gets paid later. When the gain is higher. It's all about choices!
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
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knpstr
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Re: Best way to Transfer property

Post by knpstr »

CAsage wrote: Tue Mar 19, 2019 10:19 pm
knpstr wrote: Tue Mar 19, 2019 9:01 pm It is using the exact same exemption to avoid taxes in either case, so why not use the unified credit now? Then you don't have to wait for your parents to die to receive the property (if the property wants to be transferred now).

You would potentially owe taxes when you sold (since the basis is not stepped up) unless something else in the future was done like now. But you could still transfer the property today, tax-free.
I believe what you are doing there is deferring the taxes, not avoiding them. The step up in inheritance actually makes the taxes disappear. Otherwise.... The piper just gets paid later. When the gain is higher. It's all about choices!
Correct, your basis will be the original basis. So you will have to pay potential taxes on the value increase since the father has owned it, instead of just when you owned it. Unless you again transfer it in a similar way.

However, if they transfer wants to be done now, "wait till your dad dies" isn't necessarily a viable solution either. If it doesn't matter when the transfer takes place then sure, put it in a trust and make the OP the beneficiary.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
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masonstone
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Re: Best way to Transfer property

Post by masonstone »

knpstr wrote: Wed Mar 20, 2019 7:59 am
CAsage wrote: Tue Mar 19, 2019 10:19 pm
knpstr wrote: Tue Mar 19, 2019 9:01 pm It is using the exact same exemption to avoid taxes in either case, so why not use the unified credit now? Then you don't have to wait for your parents to die to receive the property (if the property wants to be transferred now).

You would potentially owe taxes when you sold (since the basis is not stepped up) unless something else in the future was done like now. But you could still transfer the property today, tax-free.
I believe what you are doing there is deferring the taxes, not avoiding them. The step up in inheritance actually makes the taxes disappear. Otherwise.... The piper just gets paid later. When the gain is higher. It's all about choices!
Correct, your basis will be the original basis. So you will have to pay potential taxes on the value increase since the father has owned it, instead of just when you owned it. Unless you again transfer it in a similar way.

However, if they transfer wants to be done now, "wait till your dad dies" isn't necessarily a viable solution either. If it doesn't matter when the transfer takes place then sure, put it in a trust and make the OP the beneficiary.
Thanks agreed, I would like the transfer to be done now and I don't anticipate selling the property.
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knpstr
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Re: Best way to Transfer property

Post by knpstr »

masonstone wrote: Wed Mar 20, 2019 9:28 am Thanks agreed, I would like the transfer to be done now and I don't anticipate selling the property.
Then the way this can be done is as a gift and your father use some of his unified credit. You'll get the property and no one pays tax, but he'll "use up" some of his estate exemption (which would have be used later anyway if you inherited on his death).

This seems to be the solution you are looking for.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
pqwerty
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Re: Best way to Transfer property

Post by pqwerty »

masonstone wrote: Sat Feb 16, 2019 10:17 am
Thecallofduty wrote: Sat Feb 16, 2019 9:47 am
masonstone wrote: Sat Feb 16, 2019 9:24 am What is the best way to transfer a property from my father to myself and avoid paying taxes. The property is worth about 800K and is located in California.
Quitclaim deed?
Who would do a quitclaim deed?
legalzoom
https://www.legalzoom.com/personal/real ... rview.html
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