Our in-laws transferred the deed for their home to us, do I pay taxes on this transfer?

[Evaughn]

We did not pay anything for this home. They gave it to us since they could no longer maintain it and they don't live in it anymore.

[DianeW · Accepted solution]

There is nothing to report on your individual tax return concerning this transfer until and unless the home is sold.  As far as the transfer itself it's important to know how the transfer was handled.  If it was a true gift, a gift tax return may need to be completed by and for the in-laws. 

Because you did not pay anything for the house and it was transferred to your name, there may have been a $1 transfer situation to eliminate a gift transfer.  Two possible scenarios may have taken place, you will want to figure out which for your knowledge for the future.

1. The transfer is a gift which would provide a cost basis for you figured as follows.  If the FMV of the property at the time of the gift was less than the donor's adjusted basis, your basis for gain on its sale or other disposition is the same as the donor's adjusted basis, plus or minus any required adjustments to basis during the period you held the property.  A gift tax return may apply.
   

• 8 Tips to Determine if Your Gift is Taxable

If the $1 transfer took place you have a cost basis of $1 plus any transfer expenses paid by you.  You can continue to add to the cost any capital improvements you make over time.