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HatchetJack: "While title changes of realty are generally completed gifts, if the donor retains a life estate by continuing to occupy the property rent-free for example, the full value would be taxed as of the date of death."

Assuming that the donor retains an interest in the property, the donor may not need to keep a life estate in order to be allowed to occupy the property (or to avoid paying rent to the other co-owners). The last time I looked for Texas, each co-owner is permitted to occupy the property (but not exclude the other co-owners) and need not pay any rent or otherwise account for any implied rent because co-ownership carries with it the right to occupy the property. All of my discussion presumes that the co-owners do not have some kind of agreement among owners.

"Keep in mind the general fallacy of gifting low basis property in later life, especially ones covered by income tax exemptions on sale such as your principal residence."


Regards, JAFO
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