Selling parents my home

[DMartinWI]

Hello,

My parents are moving to my state.  I have a rental home that is paid for.  If my parents move into that home and I gift it to them so that they are on the deed and the new owners, can i inherit the home back later in life and have it stepped up to market value.  Basically can I inherit a home that i previously owned?

Also, my parents were going to pay off my second home mortgage off.  Value is $130K.  So should I just have them gift me the amount as a lump sum minus 60K (wife and my gifts from both parents that dont have to be filed). Or should I sell them the rental home at a 25% reduction and then gift them the amount that is over the amount i owe on my current mortgage?

any advice would be helpful!!!

[NCperson]

beyond the financial aspects have you considered the control issues?

what happens if you have a falling out with your parents and they change their wills?

what happens if the surviving spouse remarried and changes the will?

what is their financial position and what is the consideration of their nursing home needs? who is paying for that? the goal is normally to liquidate the estate not increase the size of the state if you want Medicare to come in and pay for the nursing home care ...... 

What it appears is that you are trying to take advantage of step-up rules at death.  There are rumblings (google "step-up") that the step up rules could change or be eliminated under the Biden administration; under that scenario, it may be risky to upstream assets because the likelihood of the owner dying before another administration can change the laws back again increases (and the estate ends up paying tax that it may not have paid if the assets had not been upstreamed).  This may be the biggest risk with the strategy you are contemplating.  

[M-MTax]

You ought to go see an estate planning lawyer or tax pro for advice.......someone will have to file a gift tax return and you'll need help with that. But you can get a stepped up basis later if the house ends up in your parents' estate or the last one of them to survive. 

[NCperson]

just one of many articles on the step up..

https://www.forbes.com/advisor/investing/stepped-up-basis-biden-tax-plan/

[DMartinWI]

thank you for the reply.

i dont think there would be any control issues down the road.  My parents have been married for 40 years and i dont think they will split and remarry.  Also, my relationship with my parents is very strong and i am the only child.

my parents dont really want to go to a nursing home...so hopefully that can be avoided.  

Basically, my parents moved into my rental because it is available and the timing was right.  In return, they are going to pay off my 2nd home mortgage.  130k

they planned on doing a trust to give me back the home or they were going to sell it well before needing long term care?

i am pretty open to how to handle this, i just want to make the best decision.  ultimately i would like to avoid capital gains if i leave it in my name and sell it years later without living in it.....but i also want to get my current mortgage paid for.....

any ideas or need any more info?  thanks again for the response

[NCperson]

see an estate lawyer - it'll be money well spent.