Expert: liznarr - 1/8/2007

Question
We just sold my dad's condo in Florida.  When he passed it automatically was transferred to my brother and myself thru a Life Estate Deed.
I know the Title Company will send a 1099 to me.  Do I have to claim as income the entire $amount of my portion of the proceedes?  What amount do I claim as income?

Answer
Rob,

I am going to give you what I believe to be correct information, generally, but you should contact an accountant or CPA and/or an estate tax attorney who is familiar with Florida law for exact and correct information (if Florida is where you Dad claimed residency at time of his death).

Your and your brother’s BASIS in your Dad’s condo in Florida would be the value at date of his death, not what he paid for it, and not the sales price of your sale.  The value of the condo is also probably included in the value of your Dad’s taxable estate for estate tax purposes.

As a very general example, if the condo were valued at $150,000 at time of death, and you and your brother sold it for $200,000; then your taxable amount would be $50,000.  Of course, state law comes into play, and this is where I am not qualified at all to even attempt to give you legal and/or tax/accounting advice…and many states have different laws.

In some states, there are provisions in the law regarding the deeding property “in anticipation of death,” and additional rules may apply.  In addition, if a person is receiving Medicaid benefits (as opposed to MEDICARE), there is also a transfer period in which a portion of the sale may have to be repaid, which could be up to five years.

I’m listing below a site I found on Life Estates which might be helpful for you to read:

http://www.bacon-wilson.com/legal_updates_detail.epl?news_id=60

I hope all the above is helpful and points you in the right direction.  Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth