Can I get a stepped up basis if my mother gifted her house to me and remained in her house by agreement until she died?

[marienevard973]

She put my name on the deed 15 years ago and did not set up a life estate even though the agreement was that she remain in the house until her death.

[rjs · Accepted solution]

A life estate does not have to be explicitly established in the deed. Your mother probably had an "implied life estate." If so, that would give you the stepped up basis. There is case law on this. Check with a good lawyer.

[TaxGuyBill]

I agree.  If the OP did not actually 'use' the home or benefit from it, it is an Implied Life Estate, with a Step-Up in Basis.

[Hal_Al]

I agree with rjs, you probably get stepped up basis.

[KrisD]

Life Estates protect beneficiaries or a remainderman from inheriting large tax liabilities with a home. You state that you and your mother did not use one. 

Real estate is handled differently from one state to another. In your case, I wish I could give you a definitive answer, but the best answer I can give you is to seek the advice of an attorney with background in real estate in the state where the property is located. 

My original answer was based on too many assumptions. 

[edited 01-17-19I3:30]

[Opus 17]

There's no half-step up if he was gifted the entire house in fee simple.  There might be a half step-up if she made him a co-owner, which is not indicated here.

[KrisD]

If she put his name on the deed, wouldn't he have been gifted half the house at that time?

[Opus 17]

The taxpayer needs to review the deed.  "my mother gifted her house to me and remained in her house by agreement" implies that it was not a co-ownership situation, while "She put my name on the deed" implies it might have been co-owned.   I guess I am reading this more on one side and you are reading it more on the other side, but we really can't say for sure either way without more info.

[KrisD]

Thank you, I will edit my answer.

[Opus 17]

[removed]

[Opus 17]

So "implied life estate" is a thing.  You still should see an attorney; for one thing, to get as much proof as you can of the "implied life estate" to satisfy the IRS if audited.

[Hal_Al]

It wasn't implied in this case (" remained in her house by agreement "). It's just not clear how the life estate was documented.

[Opus 17]

right, it was stated but not in writing.  documenting it is the key in case of audit

[fct Jenn]

I have a similar question. Mom actually quit claimed the deed over to her two kids. She recently passed and we are hoping there is an implied life estate even though the kids have been on the deed for over ten years. Any thoughts?

[fct Jenn]

Sorry, a bit more info on that house. Mom lived in the house until she passed and paid the mortgage which was in her name and the tax bill which was also in her name. The kids lived in two different states.