Legal Question in Wills and Trusts in Virginia
My parents are 70+ years old, and would like to add my name to the deed of their house which is a rental property valued around $400K. What are the tax implications for it, both now and if/when they pass away? Do I have to claim any of the rental income as my income, or is it OK if they continue to claim it on their tax form? Do I have to worry about any gift and/or inheritance tax? What kind of forms do we have to use? Thank you in advance for any advice you can give.
1 Answer from Attorneys
The tax implications may be something you want to ask your tax advisor. I believe that if you inherit the property from your parents you would at their death get a stepped up basis; that is, your basis in computing capital gains upon a later sale would be the value at the time of your parent's death. If your name were on the deed, that might affect your basis at the time of their death.
There could be a gift tax implication of your being given a share of the property before your parents' death, though it would most likely be offset by using your lifetime gift tax exemption.
On the rental income issue, your having joint ownership would not of itself require you to claim any of the rental income unless you received some of it.
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