Can my mother sell me her house for one dollar if I maintain it as my permanent residence?

Asked about 4 years ago - Butternut, WI

I have been living in and maintaining the family home at my cost for the past three years. My mother lives in a retirement community now, and has for the past 2 1/2 years. She wants to transfer the property to me, and as I have heard this is a simple transfer involving a quit claim deed, we would like to do this ourselves. I am told I need to file a real estate transfer form for tax purposes. I have the instructions for that as well, and can do it online I am told. I just want to make sure we are not missing anything, etc and that there won't be problems down the line. I plan to remain in the home and eventually pass it on to my children as it has been in our family several generations, so there are no plans to ever sell the home. Thank you!

Attorney answers (3)

  1. Carl Thomas Berry

    Contributor Level 10

    Answered . You should consult with a local law firm that, in addition to having real estate expertise, can also advise as to the tax issues that your fact pattern raises.

    Good luck.

  2. Jeffrey Donald Cunningham

    Contributor Level 7

    Answered . Your question raises both tax and real property issues at the very least. I would think that a gift tax return in addition to all of the attendant real property transfer documentation would be required. The transfers should not be terribly complex or expensive, but in order to preserve the chain of title and stay clear of any estate and gift tax violations, you should consult an attorney competent to handle such issues.

    The foregoing does not constitute legal advice or establish an attorney client relationship. All readers are advised to seek their own counsel and not to rely upon any information herein contained. The author is licensed to practice in the State of Georgia only.

  3. Henry Daniel Lively

    Contributor Level 20

    Answered . The transfer to you would be considered a gift for tax purposes since you are not paying fair market value for the property. Depending on the value and the amount of remaining gift tax exclusion that your mother has, your mother may have to pay gift tax. At the least she will have to file a gift tax return. You may also have reassessment issues for property tax issues. There is also the issue of step up in basis. If you mother gifts the property to you, then you will receive a carry over basis in the property, or the same basis your mother has for tax purposes. However, if you were to inherit the property after this year, you would receive a stepped up basis to fair market value at the date of death. You should consult with a local tax attorney familiar with real estate transactions.

    Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.

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