@sandy4042 wrote:
@VolvoGirl
Another good point to consider. But if the person who receives the house, moves in and it becomes their principal residence isn't the gain excluded from taxes when they sell it? Quit claim deed seems perfect for if you want to give a property to a family member who's going to live there, and you give it to them because you want to keep it in the family.
Not necessarily,
You can sell your primary residence and be exempt from capital gains taxes on the first $250,000 if you are single and $500,000 if married filing jointly. However, capital gains is the difference between your basis in the property and the sales price. Inherited properties basis for beneficiaries steps up to the market value on, the date of death while gifted property maintains the deceased basis.
The difference can be huge: for example, if the original owner paid $100,000 for a property 40 years ago and it was worth $2,000,000 when they died and the beneficiary sells it for $2,500,000 the capital gains would be $500,000 if inherited but $1,900,000 if gifted. For married filing jointly the inherited home would be tax free after the $500.000 exclusion but the gifted home would have $1,400,000 of taxable gains.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
