Now you see why it's not a good idea for an aging parent to gift their property to their children. It's better to let them inherit it so they get the step-up in the cost basis. I know my parents purchased there house in 1058 for a whopping $3,800 (2BR/1BA at the time). Added on around 1966 at a cost of $12,000 and added on again in 1972 at a cost of $17,000. The house is now 4BR/2BA now, and having replaced the roof 3 times so far since they owned it, it has a cost basis of around $42,800 give or take. Parent's wanted to gift it to us kids last year, but I talked them out of it once they understood the tax consequences. The house was appraised just over a year ago at $320,000. Definitely don't want it gifted to us. We'll happily wait to inherit it, and the longer the wait, the better as far as I'm concerned. I'm in no hurry to lose my parents. But with them both in the 80's, it could happen any time really.
