Legal Question in Wills and Trusts in New Jersey

Whether or not your mother has a mortgage on her house, she is able to sell it to you. When there is no mortgage, she can sell it at any price. Nevertheless, if she sells it to you for one dollar. the difference between the fair market value of the house and the actual selling price is a gift to you.

This gift can be taxable to your mother depending upon whether she made previous gifts and has the negative tax issue for you of having a carryover basis. For example if your mother's estate is small, and will not be subject to Federal or State taxation, the transferring the house to you as a gift does not make much sense. You will receive the house at her basis for tax purposes. If she purchasedthe house for $100,000 and it is now worth $300,000, by giving it to you the result will be a $100,000 basis to you and when you sell it will have a gain of $200,000. If instead, if she died and left the house to you as a bequest, you would receive the house at fair market value on the date of death.

You should contact a tax and estate attorney to help your mother solve this problem.

I hope this helps!

Ron Cappuccio

856 665-2121

www.SaveYourEstate.com