Dear Quentin, My mother is 88. My brother put both our names on her home deed. The house is paid for and we all live in Tennessee. I think he thought it would protect her assets, but won’t this cause a tax problem for us when she dies?
The home is paid for in full, and she purchased it around 1995. Our mother is a very healthy 88-year-old, so she has no foreseeable issues going into a nursing home. We don’t want to jeopardize her Medicare or Medicaid. Have we made a terrible mistake? Concerned Son
“There are other ways adult children can set up the transfer of a parent’s home.”
Dear Son, If you and your brother are on the deed of your mother’s house when she dies, you will likely be responsible for capital gains tax on the house after your mother dies and when you go to sell. It would mean you will not avail of a “step-up in-basis” on capital gains taxes. With a step-up in-basis, the profit on any sale would be calculated as the sale price minus the recent appraised/market price of the home — not the purchase price. In other words, the tax is based on the property’s fair market value when their benefactor …