Okay, My sister in law is gravely ill and was just admited to the hospital, she has NO INSURANCE and owns a house, her husband wants to deed the house to us with the provision that we give it back to them once all the dust settles and they pay their bills to the hospital (they don't want the hospital to take their house). So, we live in California and currently own 2 homes (principal and rental) and their house is in Idaho which they own free and clear. what do we do? should we go through with it? why or why not?
2006-12-14 16:59:47 · 6 answers · asked by bkebrian 2 in Business & Finance ➔ Taxes ➔ United States
The IRS doesn't have anything to do with property, only income from property. You'll owe a property tax to the local govt, probably.
The transaction won't stand up in most bankruptcy cases. They go back for quite a while to find if any money has been sheltered. It may differ from state-to-state.
If Idaho is a homestead state the property, at least enough for the house, can't be taken away and they'd be better off keeping it.
In my uneducated opinion, I'd venture to guess no one would have anything to gain by going through with the transaction. And you might get into trouble trying to hide money from lenders or welfare. - but not the IRS.
2006-12-14 17:13:25 · answer #1 · answered by joe_tiac 2 · 0⤊ 0⤋
I may be over my head answering this but possibly my answer may trigger some more questions. I believe your brother inlaw wants to "quit claim deed" the house to you so that it appears he has no money. I just listened to some tapes on trusts and such. If he quick deeds the house to you, this may be considered a gift. I believe that you can recieve 11K this year in tax free gifts. The home you will be getting is worth considerably more. However one can quick deed and not file with the state of the change in ownership but then the hospital may find out. Not sure if this helps.
To answer your first question. you can own as many homes as you want. Who says you will pay income taxes on them since you may have a negative on paper for rentals "losses" and you may not have to pay "as much" to the IRS.
2006-12-15 01:15:03 · answer #2 · answered by ran959 2 · 0⤊ 0⤋
Check with an attorney. This sounds like a fraudulent transfer that will not accomplish anything but getting you involved in a law suite when your brother-in-law gets sued.
He should check with an attorney before doing this. If the house is owned jointly with your sister the hospital probably can't get to it. Most states have homestead exemptions that protect the house from such claims.
What I am saying is that there are probably legal ways to protect the house and he needs to discuss with an attorney in Idaho before he does something stupid that creates problems for you and himself.
2006-12-15 06:02:51 · answer #3 · answered by waggy_33 6 · 0⤊ 0⤋
What your brother-in-law is suggesting is fraud, and could get all of you into trouble. His asking you to do this puts you in an awkward situation. Maybe you could tell him this would be fraud, and you know that he wouldn't have asked this if he weren't so upset about his wife's condition, or something like that - gives him and you a face-saving way out.
If he's planning on paying the bills to the hospital anyway, they're not likely to lose the house. He can likely make arrangements to pay the hospital bills over time.
2006-12-15 02:39:10 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
I would check with a tax attorney or an accountant before you do anything. I am not sure about specific laws in California but it might be possible for a Quit Claim deed to be signed by your brother-in-law and just don't register the deed....but as I said, before you do anything that will change your tax status (and owning property will) check with someone who is qualified!
2006-12-15 01:15:03 · answer #5 · answered by mental 3 · 0⤊ 0⤋
What they are trying to do is not going to work if they are planning on using Medicare to pay the medical bills. The transfer must be two years prior to the application for medicare. If they are trying to avoid paying the Hospital it may work. It shouldn't effect your income taxes since it would be a gift to you. Should you give it back it would be a gift to them and not taxable.
All of that said you may be playing with fire! All of this could be considered fraud and all of you could wind up in jail.
2006-12-15 01:20:14 · answer #6 · answered by ? 6 · 1⤊ 0⤋