Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How do i give my son a House the "right" way?
Old 12-19-2007, 02:03 PM   #1
Recycles dryer sheets
 
Join Date: Oct 2005
Posts: 411
How do i give my son a House the "right" way?

At some point in my life, i would like my son to take over what i own and would like to find an "appropriate" way to give it to him without paying a fortune to uncle sam, basically kept in the "family" as much as possible and do it legally.

kindly advice... the house is an investment property in which i am collecting rents and writing off depreciation as we speak. The property is around $180k which is $80k increase since i bought it.

Please advice based on your best knowledge. I heard enuff of "go see a lawyer".


enuff
__________________

__________________
Enuff2Eat is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-19-2007, 02:08 PM   #2
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,377
You realize that he'd get a step-up in basis if he got it after you were dead, right?

That's how I plan to give my kid all my "extra" appreciated assets.
__________________

__________________
Favorite ERF quote: "I'm not going to waste my time on someone who's more interested in being stubborn or obtuse or intolerant." -- Nords
Favorite ERF error message: "Sorry Nords is a moderator/admin and you are not allowed to ignore him or her."
twaddle is offline   Reply With Quote
Old 12-19-2007, 02:27 PM   #3
Recycles dryer sheets
 
Join Date: Oct 2005
Posts: 411
twaddle, could u explain that in simple english for me??
__________________
Enuff2Eat is offline   Reply With Quote
Old 12-19-2007, 02:33 PM   #4
Moderator Emeritus
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 33,702
From Nolo.com:

For tax purposes, a value that is used to determine profit or loss when property is sold. If someone inherits property that has increased in value since the deceased person acquired it, the tax basis of the new owner is "stepped-up" to the market value of the property at the time of death. The stepped-up basis means that when the property is eventually sold, there will be less taxable gain.
__________________
Numbers is hard...



REWahoo is offline   Reply With Quote
Old 12-19-2007, 02:34 PM   #5
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,377
If you sell an asset, you're taxed on the gain -- the difference between the selling price and the cost basis.

When you die, whoever inherits your assets gets a cost basis equal to the value of the assets at the time of your death. If they sell right away, for example, they pay no taxes.

Of course, this assumes that the size of your estate is below the estate tax limit. If not, see your lawyer.

(Simulposted with Wahoo)
__________________
Favorite ERF quote: "I'm not going to waste my time on someone who's more interested in being stubborn or obtuse or intolerant." -- Nords
Favorite ERF error message: "Sorry Nords is a moderator/admin and you are not allowed to ignore him or her."
twaddle is offline   Reply With Quote
Old 12-19-2007, 02:36 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 6,854
Enuff here is a good write-up on gifts and the gift tax.

Alternatively you could wait until you die to leave him the property in your will. At the point, depending on the every changing estate tax rules, your son would inherit the property, owe no tax, and have the cost basis of the property equal to the value when you passed away.
__________________
clifp is offline   Reply With Quote
Old 12-19-2007, 02:46 PM   #7
Thinks s/he gets paid by the post
lazygood4nothinbum's Avatar
 
Join Date: Feb 2006
Posts: 3,897
isn't there currently $1mm lifetime tax-free gifting per person? in any case, before making a decision you might want to see how the next set of estate tax rules read.
__________________
"off with their heads"~~dr. joseph-ignace guillotin

"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
lazygood4nothinbum is offline   Reply With Quote
Old 12-19-2007, 03:52 PM   #8
Recycles dryer sheets
 
Join Date: Oct 2005
Posts: 411
one of the reason that i ask is also because i want to leave the kids something instead of paying 99% of my asset to the Nursing Home.
__________________
Enuff2Eat is offline   Reply With Quote
Old 12-19-2007, 03:55 PM   #9
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,377
Shifting assets will help you qualify for medicaid (after the 5-year look-back period), but it won't help with taxes. You'll just be shifting the tax burden to your kid if you gift to him.
__________________
Favorite ERF quote: "I'm not going to waste my time on someone who's more interested in being stubborn or obtuse or intolerant." -- Nords
Favorite ERF error message: "Sorry Nords is a moderator/admin and you are not allowed to ignore him or her."
twaddle is offline   Reply With Quote
Old 12-19-2007, 04:43 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 5,898
Quote:
Originally Posted by Enuff2Eat View Post
one of the reason that i ask is also because i want to leave the kids something instead of paying 99% of my asset to the Nursing Home.
You might want to rethink the moral aspects of doing this. We took care of an elderly childless great aunt and uncle of DW. When getting POA work done, the attorney advised us to give away their money to their heirs so they could go on Medicaid when they were ready for the nursing home. Fired the lawyer. After they both died in the nursing home, we distributed the rest of the estate to their heirs (We were not heirs).
__________________
Feral Engineer - Idle Dandy
travelover is offline   Reply With Quote
Old 12-19-2007, 04:53 PM   #11
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,377
I don't make any moral judgements on this issue because it's a big and complex issue. Parents want to leave a legacy for their kids. Society doesn't want to pay for the burden of the elderly.

It's going to get worse. We're getting older as a country. At some point, we'll need to face options other than wasting away in the generally poor environment of nursing homes.

FWIW, there's a beautiful nursing home in a beautiful location not far from me. I jog past there every once in a while. I see the inmates residents. I see the guards staff. I hope it doesn't happen to me.
__________________
Favorite ERF quote: "I'm not going to waste my time on someone who's more interested in being stubborn or obtuse or intolerant." -- Nords
Favorite ERF error message: "Sorry Nords is a moderator/admin and you are not allowed to ignore him or her."
twaddle is offline   Reply With Quote
Old 12-19-2007, 05:14 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 5,898
Quote:
Originally Posted by twaddle View Post
I don't make any moral judgements on this issue because it's a big and complex issue. Parents want to leave a legacy for their kids. Society doesn't want to pay for the burden of the elderly.

It's going to get worse. We're getting older as a country. At some point, we'll need to face options other than wasting away in the generally poor environment of nursing homes.

FWIW, there's a beautiful nursing home in a beautiful location not far from me. I jog past there every once in a while. I see the inmates residents. I see the guards staff. I hope it doesn't happen to me.
I pray that I never end up in a nursing home either, but if I do, I won't expect you to pay for it so my heirs can enjoy my money.
__________________
Feral Engineer - Idle Dandy
travelover is offline   Reply With Quote
Old 12-19-2007, 05:38 PM   #13
Dryer sheet wannabe
 
Join Date: Jul 2005
Posts: 22
This mentality has always bothered me..

When a nursing home provides service to someone, they should be paid.

If that individual is indigent, taxpayer dollars are used to pay the bill.

Hiding assets to avoid paying the bill by appearing indigent, thereby passing that bill on to the taxpayers, is wrong.

goodguy
__________________
goodguy1_64 is offline   Reply With Quote
Old 12-19-2007, 05:42 PM   #14
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,377
I have only two more words to say on this subject: Soylent Green.
__________________
Favorite ERF quote: "I'm not going to waste my time on someone who's more interested in being stubborn or obtuse or intolerant." -- Nords
Favorite ERF error message: "Sorry Nords is a moderator/admin and you are not allowed to ignore him or her."
twaddle is offline   Reply With Quote
Old 12-19-2007, 07:29 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 5,898
Quote:
Originally Posted by twaddle View Post
I have only two more words to say on this subject: Soylent Green.
Dr. Kevorkian lives just a few miles from me and he's back from the slammer.
__________________
Feral Engineer - Idle Dandy
travelover is offline   Reply With Quote
Old 12-19-2007, 08:38 PM   #16
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 7,533
..
__________________
They are not long, the days of wine and roses
Out of a misty dream
Our path emerges for a while, then closes
Within a dream.

Ernest Dowson, from "Vitae Summa Brevis" (1896).
Gumby is offline   Reply With Quote
Old 12-20-2007, 05:49 AM   #17
Thinks s/he gets paid by the post
Milton's Avatar
 
Join Date: Apr 2007
Posts: 1,816
Quote:
Originally Posted by travelover View Post
You might want to rethink the moral aspects of doing this. We took care of an elderly childless great aunt and uncle of DW. When getting POA work done, the attorney advised us to give away their money to their heirs so they could go on Medicaid when they were ready for the nursing home. Fired the lawyer.
Perhaps I'm missing something here. But on its face, the above makes no sense. :confused:

The lawyer provided legal advice, which does not appear to be obviously incorrect. You may take issue with its "moral" aspects, but such concerns are not a lawyer's job. Keep in mind Milo O'Shea's remark to Paul Newman in The Verdict: "You see the padre on your way out; he'll punch your ticket ... you follow me?".

Quote:
Originally Posted by travelover View Post
After they both died in the nursing home, we distributed the rest of the estate to their heirs (We were not heirs).
Perhaps you might have acted differently if you were heirs and had an incentive to preserve the estate.
__________________
"If at any times we must deal in extremes, then we prefer the quiet, good-natured hypocrite to the implacable, turbulent zealot of any kind. In plain terms, we are not so fond of any set of notions, as to think them more important than the peace of society". John Toland, The Description of Epsom (1711)
Milton is offline   Reply With Quote
Old 12-20-2007, 08:48 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 5,898
Quote:
Originally Posted by Milton View Post
Perhaps I'm missing something here. But on its face, the above makes no sense. :confused:

The lawyer provided legal advice, which does not appear to be obviously incorrect. You may take issue with its "moral" aspects, but such concerns are not a lawyer's job. Keep in mind Milo O'Shea's remark to Paul Newman in The Verdict: "You see the padre on your way out; he'll punch your ticket ... you follow me?".


Perhaps you might have acted differently if you were heirs and had an incentive to preserve the estate.
There is a big difference in my mind between saying you could ditch the assets and you should ditch the assets. This lawyer recommended the latter.

I hope you didn't mean this to be as offensive as it sounds.
__________________
Feral Engineer - Idle Dandy
travelover is offline   Reply With Quote
Old 12-20-2007, 08:50 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Mississippi
Posts: 6,435
Quote:
Originally Posted by travelover View Post
You might want to rethink the moral aspects of doing this. We took care of an elderly childless great aunt and uncle of DW. When getting POA work done, the attorney advised us to give away their money to their heirs so they could go on Medicaid when they were ready for the nursing home. Fired the lawyer. After they both died in the nursing home, we distributed the rest of the estate to their heirs (We were not heirs).
Many many years ago I was having lunch with my parents and the nursing home topic came up. I mentioned the above asset transfer strategy and my mom let it be known that she didn't want the government paying for her nursing home care. I felt like she had just wore out my behind with a belt like the old days.

Needless to say, I never mentioned that again. But in full disclosure, she has given my brother's family and myself nice checks on our birthdays for the last few years. Not for the above purpose, but just for her personal satisfaction.
__________________
Full time wuss............
Dawg52 is offline   Reply With Quote
Old 12-20-2007, 08:50 AM   #20
Full time employment: Posting here.
kaudrey's Avatar
 
Join Date: Feb 2006
Location: Alexandria, Va
Posts: 718
To try to get back to the question....

As twaddle noted, it is probably most effective to give your son the house when you die, due to the step-up provision.

As for other assets, you can give away $12,000 each year to anyone you want ($24K if you are married) without paying gift taxes, and you can do that anytime. If you want to reduce your estate over time, this is one way to do it.
__________________

__________________
kaudrey is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
"Gut feel" versus "evidence-based" medicine Buckeye Health and Early Retirement 10 11-08-2007 10:21 AM
My "Core Plus" Strategy - Feedback on the "Plus" part? milmoose Young Dreamers 24 11-01-2006 09:41 AM
MOVED: "10 easy steps to FSBO your house" REWahoo FIRE and Money 0 06-05-2006 03:51 PM
"10 easy steps to FSBO your house" Nords FIRE and Money 4 06-01-2006 12:36 PM
Book reports: "Blink" & "Tipping Point" Nords Other topics 2 12-04-2005 04:15 PM

 

 
All times are GMT -6. The time now is 03:39 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2014, vBulletin Solutions, Inc.

Early Retirement News right to your Email!

Stay up-to-date with all the latest news to your inbox!

unsusbcribe at anytime with one click

Close [X]