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Hi.

Not sure if I'm asking in the right place or not, but I'll give it a shot.

My mom owns a house that my brother has lived in for probably 20 years. She has not lived in it in two of the past five years, but has been paying the mortgage.

If my brother and his wife were to buy the house from her, what would the tax ramifications be and how would be the best way to do it?


Thanks,
Caat
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what would the tax ramifications be and how would be the best way to do it?

1> At what price? fair market price?
If so the tax ramifications would be the same as if it were unrelated parties. (ex: likely cap gains for the seller, mortgage points and interest deductions for the buyer)

2> Why purchase it? Is this DIY estate planning? If so - DON'T. Find out what's the best way to keep the most money in the family after she dies. (which may be to just have the house willed to him - ASK A LAWYER) It'll cost you a few hundred to have the lawyer explain the options, but if you make a mistake it can cost you thousands.
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My mom owns a house that my brother has lived in for probably 20 years. She has not lived in it in two of the past five years, but has been paying the mortgage.

If my brother and his wife were to buy the house from her, what would the tax ramifications be and how would be the best way to do it?


Step 1 of trying to answer your question is to ask a whole lot of questions. For starters, how has all this been handled on your mother's taxes? Is it a rental? A second home?

I have to agree with the prior response. It's past time she needs some professional advice.

Phil
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1> At what price? fair market price?
If so the tax ramifications would be the same as if it were unrelated parties. (ex: likely cap gains for the seller, mortgage points and interest deductions for the buyer)


Low fair market value.


2> Why purchase it? Is this DIY estate planning? If so - DON'T. Find out what's the best way to keep the most money in the family after she dies. (which may be to just have the house willed to him - ASK A LAWYER) It'll cost you a few hundred to have the lawyer explain the options, but if you make a mistake it can cost you thousands.


She has no savings, no long-term care insurance. If she were to fall ill, we are afraid the house may be taken from him.

Once again, I will suggest they talk to a lawyer. Not sure it will do any good, but I'll suggest it. Do you think it should be an estate lawyer or a tax lawyer?

Thanks for your help. - Both.

Caat
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She has no savings, no long-term care insurance. If she were to fall ill, we are afraid the house may be taken from him.

Once again, I will suggest they talk to a lawyer. Not sure it will do any good, but I'll suggest it. Do you think it should be an estate lawyer or a tax lawyer?

.
.
Eldercare lawyer as you are worried about her health in the future
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Eldercare lawyer as you are worried about her health in the future

I agree - someone who does medicare planning, trusts, and estate planning.
The local radio station has a guy (Len Tillem) who does that full time, and does radio legal advice as a part time thing. (The stories are often pretty interesting) If you're in CA, I'd suggest asking him (his office will answer email that's relatively short and on estate/trust/medicare topics for no charge.)
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I am in California. I'll look for him. Thanks.

Thanks everybody.

Caat
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