Author Topic: Parents signing vacation home over to me?  (Read 2440 times)

frednorris

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Parents signing vacation home over to me?
« on: August 29, 2016, 06:27:40 PM »
My father has some health problems and is elderly.  My parents were discussing signing over a vacation home to me.  There's no mortgage/debt on the house. I have no brothers or sisters. I own my own house which has a mortgage which is current but I'm up to date on payments.  Nobody would be residing in the house.
The house would sell for about 125K or so.
What are the implications?  Do I pay taxes on transfer?
I think one of the things my parents are thinking about is if his medical bills pile up, that creditors might point to the house as an asset and go after that.  I'm not exactly sure if transferring it would get around that?  Is it better to just sell?  To be clear, my father is not terminal, just old and having some health problems and they're looking down the road.  He may live for some more years, and they don't want to give up the house if they don't need to.  They're thinking that I would own it and I would just let them use it, etc., but the ownership is out of their hands.
Not sure if that's all the information needed.  I would consult a lawyer, but they just brought this up and I don't really have a clue off the top of my head.

pbkmaine

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Re: Parents signing vacation home over to me?
« Reply #1 on: August 29, 2016, 06:39:16 PM »
US? What you really need is an accountant. He probably gives it to you as a gift and files IRS Form 709. Here's more information:

https://www.irs.com/articles/7-things-you-should-know-about-gift-tax

frednorris

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Re: Parents signing vacation home over to me?
« Reply #2 on: August 29, 2016, 07:05:57 PM »
Yes, in the US.  Do I understand the gift tax thing right - I found this online:

When you give anyone property valued at more than $14,000 in any one year, you have to file a gift tax form.  Also, under current law (2016) you can gift a total of $5.43 million over your lifetime without incurring a gift tax. If your residence is worth less than $5.45 million, you likely won't have to pay any gift taxes, but you will still have to file a gift tax form.

If they give me the house, and I don't sell it, there's no tax penalty? 
I guess if I sell it later, I have to pay capital gains, etc. but not really worried about it.

Is that the gist of it?

Pigeon

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Re: Parents signing vacation home over to me?
« Reply #3 on: August 29, 2016, 07:24:26 PM »
I think this would be worth a consultation with a family law/elder law attorney in your state.

One of the big issues with this kind of thing is what happens if one of your parents needs nursing home care and is unable to private pay/long term care insurance.  If they need medcaid coverage, there is a look back period for transferred assets. http://www.elderlawanswers.com/medicaids-asset-transfer-rules-12015


frednorris

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Re: Parents signing vacation home over to me?
« Reply #4 on: August 29, 2016, 07:42:34 PM »
Ok, thanks, that was the kind of information I was wondering about.  I didn't think it would be that easy to just transfer assets away.  They do still have insurance coverage, but I'll have to look into for how long.

Dee18

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Re: Parents signing vacation home over to me?
« Reply #5 on: August 29, 2016, 07:44:40 PM »
+1 on consult with an elder law attorney.

Pigeon

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Re: Parents signing vacation home over to me?
« Reply #6 on: August 29, 2016, 07:52:40 PM »
Do they have long term care insurance?  This is different from medical insurance.  Medical insurance isn't going to cover nursing home care for any length of time.

frednorris

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Re: Parents signing vacation home over to me?
« Reply #7 on: August 29, 2016, 07:58:17 PM »
I'm not sure, I'll have to check.  My father has cancer, not aggressive, and outside of that he's very active, it was kind of a shock.  I think if it turns out to be terminal it won't involve long term care, that's more what they were thinking, if he dies soon, they want to be ready financially. 
It sucks, but thanks for the answers everybody, you've been very helpful.

Dividend Bro

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Re: Parents signing vacation home over to me?
« Reply #8 on: August 31, 2016, 10:21:15 AM »
Frednorris - This is exactly what my father did. He had a medical issue and got paranoid that it might lead to cancer. It didn't, but it spooked him enough to transfer the house in my name. He died less than two months later from a heart attack unrelated to the prior issue. Crazy.

He transferred the deed through a lawyer, though I hadn't heard anything about a transfer tax. Although at this point now, I'm not sure it matters. I'm currently looking at ways to use the equity in the house since it is not my primary residence (mom still lives there). If I can be of any help, let me know.

Choices

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Re: Parents signing vacation home over to me?
« Reply #9 on: August 31, 2016, 11:52:35 AM »
An additional issue is the cost basis of the house. See an accountant or an attorney, but I think if he gives it to you now then his basis becomes your basis, though if you inherit it at death, then your basis is the value of the house at the time of his death.

lizzzi

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Re: Parents signing vacation home over to me?
« Reply #10 on: August 31, 2016, 12:16:14 PM »
I would not take the house from them, but encourage your parents to keep the asset--either the house itself or the money they gain by selling it--in their own accounts. There are too many things they may need to pay out of pocket in their old age for them to be overly generous by giving you the house. They may need major handicapped renovations in their primary residence to keep them at home instead of being placed in a nursing home or assisted living someday. They may need to hire a private-pay aide for one or both of them, and that can easily run $25/hr. What if they need high hours, or a live-in?  An aide 8 hours a day x 7 days a week could easily cost $4000 per month...and what if they need more than that? What about if one of your parents becomes wheelchair-bound, to where a wheelchair-adapted van would add immeasurably to their quality of life and ability to get out and about? Those things aren't cheap, but can be a godsend if they've got the money. Just some thoughts after 45 years of nursing, and memories of four elderly relatives who were able to be cared for at home until the day they died--because they could afford it.

NW Girl

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Re: Parents signing vacation home over to me?
« Reply #11 on: August 31, 2016, 04:10:11 PM »
Also consider property tax implications (related to cost basis, I believe), depending on state. A friend's in-laws gifted their home in CA to my friend in similar circumstances and the property taxes tripled.