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Not A Real Gift |
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Dear Edith: You have written that it is better to inherit real estate, because you get a new stepped-up cost basis and may not have any taxable profit if you sell it soon after. On the other hand if your mother writes it over to you, you take over her cost basis and might have capital gains tax to pay later. But I heard that if the mother stayed in the house maybe you could claim you really inherited it. Do you know anything about that? |
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Yes, the IRS has ruled in some cases that when the donor continued living in the house and treated it as their own, there wasn’t really any gift. The government held, in that case, that the parent really kept an informal life estate, so the house was actually inherited. A lawyer friend says one useful question is “What was the address on the death certificate?” |
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Edith
Originally published on March 6, 2006 |
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