Capital Gains on Property for Parents

[julypilot96]

Hi , 

Hope someone can help me. My situation is below:

1. I bought my father a townhome in June 2018--I mortgaged in my name only

2. Father provided downpayment and paid all closing cost from his account

3. I added father to deed at the time of closing

4. Father makes all mortgage payments from his personal checking account and pays all expenses

5. Father claimed mortgage interest on 2018 taxes.

6. Other than the mortgage being in my name, I have never paid for anything regarding the property

My father is an older person so my question is.... if he passes before ever selling the property, will I get stuck paying taxes on the gains or will it be treated like an inheritance since he has made all payments and is on the deed? Or because I'm also on the deed, will I get stuck with half the taxes?

Thank you!

[Anonymous_]

You might want to consult with an estates and trusts attorney in your area in order to get more options specifically tailored for your situation. 

See https://www.avvo.com/

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@julypilot96 wrote:

....Or because I'm also on the deed, will I get stuck with half the taxes?

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As it stands, with just the information provided, you will get stuck with half of any gain. Assuming your father passes first with you also on title, only his half (which you stated you will inherit) will get stepped up to its fair market value as of the date of his death. The basis in your half will continue to be your cost plus any improvements made to the property.

[Critter]

It would be wise to seek counsel from an elder attorney to get things set up properly.