joint tenant estate gift tax question

[eyeballjames]

Parents and I purchased a house together 3years ago where they contributed 500K together and I contributed 300K with the deed stating all joint tenants.  Last year with my mother's passing the house deed is changed to my father and I as joint tenants.  So what happens now to the ownership?  Do my father, the surviving spouse, still hold the 500K interest leaving ownership unchanged or do I gain 1/2 of my mother's (250/2=125) where I now hold 425K (300+125) and my father 375K (250+125)?  If I do gain in asset then there will be gift tax involved?  Please help. Thank you.

[Anonymous]

this is really an income tax not gift tax forum.  if the deed gave each of you equal ownership then when you paid $300 for a 1/3 interest in a 500K house you may have actually made a gift to your parents.  so your basis to start might actually be only $166,667 - you get no basis for the gift you made to your parents.    when you mother died you got 1/2 of her 1/3 interest.        you inherited your mother's portion. inheritance at least for Federal purposes is not a gift.  generally  inherited property gets stepped up to fair market value. if the house was worth $600,000  her 1/3 would be 200k so you get to add 100k to your basis which is now $$266,667.    your dad's basis is 1/2 of the $200, paid + the value of the gift you made to him back then or 66,667 and he also gets a step up of 100k for the portion he inherited.   so his basis is the same as yours.   total 533,333   this seems right 500k originally paid + FMV of her portion or 200k less her basis of 166,667 

warning i'm not an expert in inheritance taxes,  the best thing to do would be to check with a lawyer in your state.   

[eyeballjames]

Thank you so much for the reply!

I meant to say house cost total 800k with parents paid 500k and I paid 300k, but totally followed your explanation.  So basically we don’t have to deal with any tax issues until the house is sold.