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filis49
New Member

Can we sell a life estate property prior to my mothers death? She has been in a nursing home for the past 10 years covered by MA. The estate was set up in 1991.

 
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5 Replies
TomD8
Level 15

Can we sell a life estate property prior to my mothers death? She has been in a nursing home for the past 10 years covered by MA. The estate was set up in 1991.

I agree with Opus17 that you should consult an attorney before taking any action, because there are serious tax consequences to be considered.

You can sell a life estate property prior to the life tenant's death.  If you sell while your mother still lives, the value of the proceeds would be divided between the life tenant (your Mom) and the remainderman (you) according to IRS actuarial tables.  You would not be eligible for a capital gains tax exclusion on your portion unless you met the IRS requirements for the exclusion, which include having lived in the home as your primary residence for two of the past five years.

Another factor, as Opus 17 indicated, is that if the property is sold after the life tenant's passing, it will benefit from a stepped-up cost basis - the number from which the capital gain will be calculated.   But if the life tenant is still living, there is no step-up in the cost basis.

By the way, if your Mom has been in a licensed care facility, that counts toward her own residence requirement for the capital gains exclusion on her portion.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Can we sell a life estate property prior to my mothers death? She has been in a nursing home for the past 10 years covered by MA. The estate was set up in 1991.

That's a legal question, you would have to check an attorney in your state. Possibly she has to agree.  

As a tax matter, you may owe more capital gains tax than if you waited until she passed away and you inherited it.
cjkrinke
New Member

Can we sell a life estate property prior to my mothers death? She has been in a nursing home for the past 10 years covered by MA. The estate was set up in 1991.

What tax form should I use to file the sale of a home as one of the remaindermen.

 

 

LeonardS
Expert Alumni

Can we sell a life estate property prior to my mothers death? She has been in a nursing home for the past 10 years covered by MA. The estate was set up in 1991.

There are many issues involved in the sale and reporting of life estate property.  You need to resolve the legal questions prior to reporting the sale.  How the legal issues are handled may impact how and what forms are required to report the sale.

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TomD8
Level 15

Can we sell a life estate property prior to my mothers death? She has been in a nursing home for the past 10 years covered by MA. The estate was set up in 1991.

-removed-

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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