Will the IRS come after me if I buy my Father in Laws house?

Question

My father in law is 86 and failing. He wants my wife to buy his house by paying off her brothers, for there part of the inheritence. The brothers have agreed to it. We would do a quick claim for the transaction leaving my father in laws name on title with both my self and my wifes. All would be recorded. Our current house is being sold and this would become our primary home. We live in California. Should we do this?

Answer 1

If she can wait until he has died she will get a stepped up basis in the house. She can gift her siblings up to 12K a year without filling out a gift tax return but no need to cheat.
She can have them each inherit a part with a stepped up basis then buy them out legally and there is no gain on the sale.
Doing this stuff before death is very expensive. She will have the same cost basis as he had if he gifts her the house early.
He needs an estate planner to avoid the most taxes and cost.

Answer 2

I think what will happen (depending on state laws) is that when he dies you will still have to go thru probate. The brothers will still have a right to inherent whatever part of the title that is still in his name.

Talk to a real estate attorney. There is some way the house can be put totally in you and your wife's name now and yet he has a right to live there until his death. That would probably be much cleaner.

The IRS thing would concern how much the house is worth and what size "gift" your father in law is giving out now. The amount of money and how it is given would be important- the lawyer can probably help with that also.

Answer 3

The ideal situation would have been to do a Transfer on Death Deed but California is still studiying the passing of such laws.
I would recommend that a California attorney be consulted and asked what if we have my father in law issue a deed to all the heirs now, retaining a life estate and then have the heirs deed their interest to us subject to my father in laws life estate.
That would work and it has no bearing on the IRS
IRS: Tax information when buying a home: http://www.irs.gov/publications/p530/ix01.html
Best of luck to you on your research

Answer 4

i do no longer choose to signify doing this yet you are able to piggy back onto your grandfathers credit or brother or regardless of. there additionally are credit fix centers obtainable which will advance your credit for you for a cost. now I enormously disagree with piggy backing because of the fact frankly it particularly is cheating the equipment. so what you do is have somebody with great credit co-sign onto something small like some funiture to your new dwelling house. pay off the stuff speedy and that i mean interior of approximately 3 or 4 months. now in case you do not have that quantity of time you additionally can pass right into a sub top credit industry then refinance out as quickly as you have some credit usual. thats what I did and my credit is great. be counseled in case you do the piggy back decision make optimistic the guy you're piggy backing with has no longer something undesirable on thier record.

Answer 5

Yes, it is Quit Claim Deed, which passes "whatever interest you have" in real estate to another, but doesn't warrant (or guarantee) the title.

Many people transfer title by Quit Claim Deed; however, you would probably have trouble financing, unless the title turned out clear after all.

Answer 6

It depends on what you state the title to be. There are a number of ways to share a house, normally done by married couples, but there are several things you need to look into just to be sure that when he passes the irs wont tax you at 50%. Speak to a cert. financial advisor before signing anything. They are the best at knowing what the IRS will/can do.

Answer 7

See a Real Estate Attorney. It's called a Quit Claim and it doesn't transfer property. A General Warranty or Special Warranty Deed transfers property.

Is their a mortage on it? You can't take his name off the deed if there is.