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I apologize if this is a common question. I did a serach and came up empty.

I don't know if I've been handed a problem or not...

Last year, on the advice of someone (attorney, estate planner, whatever), my parents decided to sell me their house for $1 and include the provision in their deed that they can continue to live there for the rest of their lives. I believe this was an attempt to avoid losing the home from their estate if they need to go into a nursing home. (My Dad often gets on a rant about how people who rent lose nothing, but people who own a home lose it to the state.)

I have no idea if this was a good thing for them to do, but I wasn't consulted. The first I heard of it was when they handed me a copy of the deed. I don't remember signing anything last year, and if I did I didn't know or realize that this was what it was about.

Anyway, I see two things that I want to ask right off. Maybe there are a couple of hundred more I should be asking (and please tell me if that's so) but these occur to me now.

1) What happens when they eventually die. I have no plans to live in the house. I assume my cost basis for the house is $1, and if I sold it for, say, $150,000, that my profit would be $149,999. Do I pay taxes on that, and if so at what rate?

2) Since I supposedly own the house now, can I deduct the property taxes on my income tax? They don't itemize, and a retired CPA who's a neighbor says I can do so as long as I pay the taxes. Is he right?

Thanks for this and any other help you can give.

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