Expert: John Stancil, CPA - 8/8/2006

Question
My mother wants to put her house in my name. What tax ramifications are there for me? I have read about issues for her gifting but what about my receiving? She thinks that doing this will save her house from being used to pay for nursing home costs.

Answer
Candace,

Thanks for your question.

There are several potential negative aspects of doing this.  From a gift tax standpoint, any amount in excess of $12,000 a year is considered a taxable gift.  This means that a Form 709, Gift Tax Return must be filed.  However, there is a lifetime exemption of $1,000,000 so she would not likely pay any tax.  This exemption counts as a part of her estate tax exemption when she dies.

If she gives you the house, you will receive her basis in the house.  If you inherit the house, you will inherit it at fair market value as of the date of her death.  If you are not going to use the house as your main home, the tax implications are significantly different between the two if you sell the house.

If you own and use the house as your main home for 24 of the prior 60 months, you can exclude up to $250,000 of gain from tax ($500,000 if married filing jointly).

If she sells the house, she would probably qualify for the exclusion, presuming she meets the above criteria.

None of this addresses the issue of paying for the nursing home costs.  That is a technical area with a lot of variations and I could not begin to advise you on that in this forum as there are so many variables.

Hope this helps.

John Stancil, CPA