Real estate law 101

August 18, 2006 8:06 AM

Help me make sense of real estate law

In June of this year my father signed over his house to me under the condition that he have lifetime tenancy. He passed away two weeks ago. I am so very greatful that I am now a homeowner, but the house has many hard memories for me and the town has never felt like home. I've googled all sorts of things and cannot find out whether If I sell the house will I be responsible for any taxes, and if so, what will those taxes be based on.

A little more information; I moved into the house in June to help care for him and the house is in Massachusetts.

posted by a22lamia to law & government (4 comments total)

sounds like the taxes that might be due are associated with the transfer of the home in june. i'm guessing you have to report that as income, unless you paid him something close to it's actual value and assuming you took the necessary legal steps to change ownership back in june.
posted by lester at 8:44 AM on August 18, 2006

This question from About.com seems to say that your tax burden will be determined by her "basis." It also says the living in the house for two years will allow you to take a $250,000 exclusion on the value if you sell, apparently taken from here.

On preview of lester, I don't believe you owe any taxes until you sell, unless your father has exceeded the $1,000,000 gift limit.
posted by justkevin at 8:53 AM on August 18, 2006

The limit is $2m lifetime this year. (It changes annually till 2010 unless Congress gets its act together before then.) So, as justkevin said, you owe nothing if your father did not exceed the $2m lifetime gift limit and if he did then his estate will have to pay out.

Because you took possession before your father died (big mistake), if you sell now your tax liability will be what you get for the house less what your father paid for it whenever he bought it less any capital costs he spent (i.e. improvements). Had you inherited it, you would have paid nothing.

As justkevin rightly points out, if you live in it for two years you will get a $250k exemption.
posted by TheRaven at 12:10 PM on August 18, 2006

TheRaven: I believe you are mistaken, as far as I understand in cases of ownership transfer with lifetime tenancy my tax base is the value of the house at the time of my fathers death.

Thanks for your answers
posted by a22lamia at 12:47 PM on August 18, 2006