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Sold With Parents |
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Several years ago, my parents signed over their home to me with the "life use" clause. Just recently, they went into a assisted living apartment and we put the property on the market. It sold and now I am unsure about the tax liability. Because of the "life use" clause, I could not sell the property myself. My parents wanted to sell it. Would my cost basis be the day the property sold or would the basis be their original purchase price plus improvements? I did receive some of the sale proceeds but also gave my parents some money as well. Thanks in advance. I never miss your column. |
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I am not a CPA or a tax attorney, and I don't know just what the "life use" you mention was. If it was life tenancy, your folks were actual owners during their lifetimes, and I believe they can use the homesellers exclusion on their share of the proceeds. The IRS has tables (based on their life expectancy) telling what share of the sale price was due to you as the eventual owner. My guess is that your share is taxable, and your cost basis, because you received a gift, was the same as your folks' basis, or rather, a percentage of their cost basis, depending on the percentage of your proceeds. It sounds complicated, and I may not be right -- better rely on a good tax professional this year. |
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Edith
Originally published on January 31, 2009 |
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