Sale of Inherited Home and Gift Taxes

[mgawro01]

Thanks for the response.    I thought I would just call a CPA but should I be contacting a Tax Consultant or someone else for the expert advice.  

[Opus 17]

@mgawro01 

The letters after a persons name matter less than their actual expertise.  An attorney, CPA, or enrolled agent all might be appropriate. However, you probably wouldn’t talk to an attorney who specializes in drunk, driving cases or a CPA who helps small towns issue municipal bonds.

I would probably start by looking for a an attorney or law firm who specializes in elder law. This is the kind of firm your father should have gone to originally to figure out how to handle and distribute his property with the least tax consequences to his heirs. This kind of firm should have attorneys and accountants available who can also advise on dealing with the situation after the fact. 

[tagteam]

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@Opus 17 wrote:

I would probably start by looking for a an attorney or law firm who specializes in elder law. 

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I agree and you would want an attorney whose practice at least incorporates the likes of estate planning and/or real estate in your local area.

See https://www.avvo.com/estate-planning-lawyer.html

PS: Look for one who offers a free initial consultation. You can explain your scenario and may very well be able to determine whether or not the attorney can help you get the results you need before being out of pocket for any fees.

[mgawro01]

I did contact one CPA and she thought my cost basis would be the amount my Dad paid for the house and it wouldn't step up to the value of the house when I was added to the deed in 2008.   He paid $15,000 but the value in 2008 was $200,000 so a big difference.   She said because he added me to the deed it was considered a gift.

[tagteam]

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@mgawro01 wrote:

She said because he added me to the deed it was considered a gift.

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You might want to ask her whether she has ever heard of an implied life estate (26 CFR §20.2036-1).

See https://www.law.cornell.edu/cfr/text/26/20.2036-1

If she has not, then you might want to look for another CPA (or tax attorney).

[Opus 17]

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@tagteam wrote:

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@mgawro01 wrote:

She said because he added me to the deed it was considered a gift.

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You might want to ask her whether she has ever heard of an implied life estate (26 CFR §20.2036-1).

See https://www.law.cornell.edu/cfr/text/26/20.2036-1

If she has not, then you might want to look for another CPA (or tax attorney).

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I agree.   It sounds like you got a "true but lazy" answer.  I don't know how hard it might be to prove an implied life estate if you were challenged, but it would save you at least $15,000 in taxes. 

[rjs]

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@mgawro01 wrote:

She said because he added me to the deed it was considered a gift.

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Only half of it was a gift. The other half you inherited. Your basis has to be calculated separately for each half. And the gifted half might not have been a gift of the entire half, or might not have been a completed gift, if there was a life estate.

You definitely need a better tax expert or attorney.