Posted by dealmaker on April 12, 2006 at 08:03:00:
Having “elderly” parents transfer ANY capital asset to their offspring is a BAD idea almost all the time. Particularly so in a high appreciation area like CA.
When they die, and you inherit the ppty you will do so at a “step up” in basis. As an example, they bought the house in '75 for $50K, they die next year and you inherit it, but it’s then worth $550K, you sell it for $550K, you owe NO tax on the gain.
Also if they are looking to deplete their assets to gain access to Medicaid, I believe there is a 5 year “look-back” rule. This prevents people from depleting their assets in order to “impoversh” themselves to gain access to Medicaid.
Posted by Anthony (CA) on April 11, 2006 at 17:34:28:
Hello - I was just wondering what (if any) tax repercussions there may be for either myself or my parents, if they were to do a quit-claim deed to myself? Thanks in advance.
Posted by dealmaker on April 11, 2006 at 21:51:51:
The more important question is WHY are your parents going to quit claim a ppty to you? There could be very serious tax consequences due to a “step up” in value. I’m guessing your parents are elderly.
You need to explain the reason here. Like dealmaker ask “WHY”? The if to avoid probate there are much better ways than just signing a quit claim deed. The tax bite could be a killer if not done right.