Would it be better if my mother sold me her house for a dollar or left it to me in her Will?

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Would it be better if my mother sold me her house for a dollar or left it to me in her Will?

She isn’t terminally ill and will live in her home until she passes. She owns her home out right. I’ve heard of gift tax and inheritance tax but we are unsure as to which direction would be the best to go in.

Asked on November 30, 2011 under Real Estate Law, Indiana

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Good question. I suggest that for a final answer to your question after you read this answer is that you and your mother meet with an experienced Wills and trust attorney about your question.

If you were meeting with me, I would have your mother leave you her home via a trust (or Will). That way upon her passing, the appreciated value of the home post purchase (assuming there is such) then it gets a stepped up basis for you.

However if your mother has a sizable estate, then a transfer of a fractionalized interest in the home each you ($13,000 per IRS rules which would not be subject to a gift tax to your mother) ma be in order. The property would need to be appraised for the start of the gifting.

Do not do the sale for the $1.00. That will trigger possible gift tax issues.


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