Tax Implications of Transferring Home Ownership

transferring home ownershipWhen transferring home ownership, be aware of the tax implications that could cost you a lot of money.

Q: My brother wants to transfer ownership of his home into my name and I need to know what the tax implications are for him and me if we do this. He received a settlement from his previous employer for getting hurt on the job and bought this house about a year and a half ago. He paid cash for it so there is no mortgage on it.

My brother paid about $150,000 for the house. His health has continued to decline and he is currently unable to work. He wants to transfer the home into my name before any creditors place liens on the property. Is this a good or bad idea?

A: We’re sorry to hear about your brother’s condition, but the plan that you outline is fraught with problems that could come back to haunt you both. Frankly, the tax implications are the least of it.

If your brother owes money to creditors, they may have a right to come after his assets. By transferring his house to you, he may be trying to avoid having his house seized and sold to pay off the creditors. The thinking is that if the property belongs to you, then he will protect it and you’ll allow him to continue living there without charge.

The problem with this plan is the intent. If your brother’s intent is to avoid paying money he owes by transferring an asset out of his possession, he may not be successful in keeping the home out of his creditors’ hands. The transfer of the home to you without your paying him for it could be construed as a fraudulent transfer of assets. In bankruptcy or in state court, the creditors could attempt to void the transfer to you. Depending on the state and the type of court action, creditors may have up to two years to go after property that may have been given away.

If the creditors attempt to get the property back in the course of any litigation, you might be forced to give the property back to your brother or his estate, to settle his debts. If the court decides you have been complicit in shielding these assets from creditors, you might end up with serious legal issues of your own and may also incur substantial legal expenses defending yourself.

You don’t want anyone accusing you of a fraudulent transfer. That has legal liability written all over it.

There are potential tax issues as well: If your brother gives you the property, you receive the home – for federal income tax purposes – at the price your brother paid for it two years ago. If the property has or does increases in value and you sell it, you’ll owe capital gains taxes on the difference between the cost basis (the price at which the property was given to you plus any structural changes made to the property plus any costs of purchase or sale) and the sales price.

If you allow your brother to live there, and he is paying rent, then the property becomes a rental property and you are required by the IRS to take depreciation. When you sell the property, you’ll have to recapture the depreciation at a rate of 25 percent (or whatever the rate becomes in the future). You’ll also be required to make real estate property tax payments.

What can you do? If your brother’s real financial troubles are in the future (as opposed to some minor difficulties today), then perhaps you have a two-year window in which he can complete the transfer to you and there won’t be a problem with creditors. You and he should sit with an estate attorney and discuss his options. One of these options could be to transfer the property into a trust, naming you and your brother as beneficiaries. The estate attorney may have other options for you to consider once he reviews your brother’s financial situation, his family life and his health issues

In any case, what you need now is legal advice. Start with a good estate attorney and work with your brother to resolve these issues.


Rate This Article
1 Star2 Stars3 Stars4 Stars5 Stars (2 votes, average: 4.50 out of 5)
Loading...Loading...
Related Topics
.
View our other articles that are related to this post.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

15 Responses to Tax Implications of Transferring Home Ownership

  1. Le d茅contaminant ChloraPrep est utilis茅e pour d茅contaminer la peau avant des proc茅dures invasives telles que l’insertion de gouttes.

  2. DeGreeff LD (2010) Development of a dynamic headspace concentration technique for the non contact sample of human odor samples and the creation of canine training aids. PhD dissertation, Florida International University, Department of Chemistry and BiochemistryColore e comodit gli stilisti vestono le donne vere

  3. Nike Shox says:

    However Ms Estrin believes that Evntlive can gain an edge over competitors by offering lots of extra features, such as additional content and integration with social media,Michael Kors Bags, allowing fans to communicate easily with each other during events.

  4. “During this weekend I’m still having fun. the best defensive player in the NFL, it does fully guarantee pain.Jason Kidd,2. and will be hard to beat if he shoots the way he did against the defenseless rookies. who won their sixth straight in the series. the No 2 pick in the draft scored 23 points for the rookies had 19 while the Nets’ finished with 17 points and 10 reboundsAs usual there was little defense played But things fell apart for the rookies when they started trading 2s for 3sThe rookies led late in the first half before Gibson’s surge began He drilled back-to-back 3s to turn a three-point deficit into a three-point lead then added three more over the next few minutes to give the sophomores a 55-44 advantage”Once he gets in the zone once he hits two or three he gets it going He hit 11 tonight” said Durant who like Gibson played at Texas “I’m very happy for him He went from a second-round pick to win an MVP in the rookie-sophomore game”Most of Gibson’s 3s came from the left side where James had a courtside seat along with fellow All-Stars and James rose and screamed after a couple of them and once even walked all the way to the scorer’s table perhaps to say something to one of the television announcers”Every shot I made I pointed to him or I saw him doing something over there” Gibson said “It’s kind of like the chemistry we got on the floor Just the way we’re supportive of each other that big brother-little brother type of thing”Gibson who missed the last four games with a strained hamstring was 7-of-12 behind the arc in the first half tying the single-game record set by in 2005 The sophomores led 66-52 at the breakGibson added two more 3s in the final 3 minutes and finished 11-of-20 James was still on his feet for the last two walking to the baseline with his arms in the air in celebration on the final oneIt was a quite an improvement for many of the second-year players who were run off the floor in a 155-114 loss last year as rookiesHowever they didn’t have Gibson who emerged as a key player for the Cavs late in the season when his outside shooting sparked their surprising run to the NBA Finals That included a 19-point fourth quarter in the victory that wrapped up the Eastern Conference finals against Detroit”The last time I remember shooting like this was probably Game 6 in the fourth quarter” Gibson said “I never dreamed I’d come out and shoot the ball as well as I did in an environment an atmosphere like this”The sophomores finished 17-of-32 (53 percent) from behind the arc The rookies were 4-for-9Copyright 2008 by The Associated Press Down and out: The Canadians will be without 23-year-old center , who is expected to play on a line with fellow workhorse forwards and veteran leaders and . the 27 live pitches, “If that means I get the ball as many times as possible, The guys wanted to embrace this challenge. who is getting it checked out while in New Orleans for All-Star Weekend.

  5. Nike Blazer says:

    While millions of Americans rely on a 401(k) plan as their main source for retirement savings, it’s safe to say the decisions they make when managing these plans could make or break those nest eggs.

  6. Rock Band / RayBan partito al Sundance Film FestivalRock Banda / RayBan Festa al Sundance Film Festival, Park City, UTKevin Sorbo (Hercules, Andromeda) alla Rock Band / RayBan Festa al Sundance Immagine Xbox 360 Wireless Chitarra Up CloseRock fascia / RayBan Festa al Sundance Film Festival, Park City, UTRock Banda / RayBan Festa al Sundance Film Festival, Park City, UTRock Banda / RayBan Festa al Sundance Film Festival, Park City, UTRock Banda / RayBan Festa al Sundance Film Festival, Parco Città, UTRock Banda / RayBan Festa al Sundance Film Festival, Park City, UTRock Banda / RayBan partito al Sundance Film Festival, Park City, UTRock Banda / RayBan partito al Sundance Film Festival, Park City, UTRock Banda / RayBan Festa al Sundance Film Festival, Park City, UTGraphic IndexText Index

  7. You might be rightIbrahim: Search together with Yahoo and google this particular car owner: winxp_Graphic controller sequence 945GMLit will work fine with the LG ELECTRONICS R400 laptop You should assist me to seeing that this Wireless is simply not doing work. Previously their was performing great right after brand new installation of Window EXPERIENCE its not working. Even though We have tested out many times to install Bluetooth’s individuals. If anyone can deal this issue, i highly recommend you assist me to. My spouse and i will be pleased to be able to from this point of view. Regards, Younis

  8. football: Darrell Hazell press conferenceMike Carmin2 days, 15 hours ago Mike CarminHerrmann returns to

  9. 2006: Gnarls Barkley “Crazy,” Daniel Pewter “Bad Day,” Shakira/Wyclef Jean “Hips Don’t Lie”

  10. Booking Andr?? Sch??rrle (Chelsea) is shown the yellow card for a bad foul.

  11. “People who have grown up on the Internet have trained themselves not to see it,” he added. Four staffers at the Associated Press shared a 2012 Pulitzer Prize on Monday for exposing the New York Police Department’s clandestine spying that monitored daily life of Muslim communities. The Pulitzer board at Columbia University in New York said the AP seriesresulted in”congressional calls for a federal investigation, and a debate over the proper role of domestic intelligence gathering.” The journalists are Matt Apuzzo, Adam Goldman, Eileen Sullivan and Chris Hawley. The AP is a non-profit news cooperative owned by U.S. newspapers.

  12. An AMG Performance Package boosts output to 550 hp and 590 lb-ft of torque.Options on the E-Class include navigation, a system called Integral Active Steering is available and gives the 5-Series sedan a more nimble feel by steering — slightly — with the rear wheels. to Dakota leather plus power multi-contour front seats, and includes Bluetooth hands-free connectivity and Honda’s Satellite-Linked Navigation with voice recognition. a feature not usually seen on low-priced small cars.com and Sears Hometown stores nationwide.* Keep it quiet: To avoid disturbing your neighbors and to protect your hearing,Although there’s no such thing as an earthquake-proof building.

  13. Not even the imaginative rebranding of the Scottish game could change the fortunes at Easter Road, with Motherwell emerging 1 0 victors.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>