Legal Question in Wills and Trusts in New York

Re: Capital Gains tax on real estate

You don�t mention the reason you want to get title of the residence in a name other than your parents. I assume you have a desire to make them up Medicare eligible; but that is only a guess.

If the residence is the primary residence of your parents, it can be sold by your parents to you at fair market and if the gain is $500,000 or less, the transaction will not bring about the obligation to pay a capital gain tax.

The cost basis of the residence in your hands will be the fair market value, presumably $750,000, and in the event of any sale the capital gains tax will be on the appreciation, if any, from the date you acquired the residence.

If you should inherit the house from your parents then your cost basis at the time of inheritance will be a fair market value of the house at the time of the death of a parent from which you inherited the house.

Re: Capital Gains tax on real estate

ANY TRANSFER BY WAY OF GIFT RESULTS IN TRANSFERRED BASIS (YOU TAKE THEIR ORIGINAL COST PLUS ANY IMPROVEMENTS THEY MADE), WITH CAPITAL GAIN IMPLICATIONS. THIS IS PARTICULALRLY TRUE IF IT IS NOT AND HAS NOT BEEN YOUR PRIMARY RESIDENCE FOR 2 OF THE PRIOR 5 YEARS BEFORE THE SALE. THEY COULD GIVE YOU A PARTIAL INTEREST NOW AND ALLOW YOU TO INHERIT THE BALANCE WHEN THEY PASS AWAY, WHICH WOULD GIVE YOU THE DATE OF DEATH VALUE AS A NEW BASIS, FOR THE REMAINING INTEREST. THEY SHOULD CHECK TO BE SURE THEY DO NOT HAVE A NEW YORK OR FEDERAL ESTATE OR INHERITANCE TAX POSSIBILITY, WHICH COULD DETERMINE WHAT INTEREST TO GIVE CURRENTLY. THIS IS A RESPONSE TO AN INTERNET QUESTION AND THE REPLY IS NOT INTENDED TO BE LEGAL ADVICE OR TO CREATE AN ATTORNEY-CLIENT RELATIONSHIP.

Re: Capital Gains tax on real estate

Your parents can make a conditional transfer to you.

For Medicaid purposes the house belongs to you.

For estate tax purposes you will receive the stepped up basis at death.

Consequently, there would be no capital gains taxes due if you sell upon their death.

Feel free to contact me for further details and approximate fees.

This advice is based upon the limited facts presented in an internet question and does not establish an attorney-client relationship.