Inherit land?

Question

My father is a senior citizen and not doing so well. He owns land. I am one of two of his children. Both of us children have tax problems which we are working to resolve. In the mean time, what is the best way to secure ownership of the land in the event my father passes on before our tax problems are fixed?

Answer 1

I don't want to sound bad, but, it would probably be best for you to wait until he passes away and have the property be passed down to you thru his estate. This way the property is going to be exempted from the death tax due to the inheritance exemption.

Also, the land will have a new tax basis (initial value) for when you and your sibling sell. This means the following: if he were to sell the land now, he would have to pay taxes on the capital gains on the value of the property. If he bought it for $10,000 (tax basis) and it's worth $100,000, he'd have to pay taxes on $90,000 of gains. If it comes to you thru his estate, it has a new tax basis of $100,000 and, if you sell it for that, there are no taxes on gains, as you have none.

Please see your CPA or ask a tax advisor for more specifics, but this should be the gist of things.

Best of luck and I'm sorry for your father not doing too well.

Answer 2

I am in no way an expert in holding title to real estate. You should really talk to a real estate attorney. I am a real estate appraiser and I do appraisals all the time to settle estates. I know that there is a certain type of ownership I believe is called a life estate which you and your sibling would gain title to the property when he passess away without paying taxes. You should check with a CPA and real estate attorney so you can decide on the best way to hold title to the property.