My mother currently owns property with a residence which she wishes to give to me (owned outright with no mortgage), however she would require me to give a much smaller amount for the property than its true value. Now in terms of taxes for the near and distant future (whenever I sell the house) what is best to do?

1. Just add me to the deed with quit claim or something similar so I can get a loan and pay her
2. Get a mortgage and buy property from her for the smaller amount, seems stupid since my tax basis would then be at that small amount and her capital loss would be non-deductible
3. Gift the house to me, but would the taxes be huge?

We have no issue having both of us on the deed, just need to get her some money to put away for retirement and I would need to tap the house's equity for that. What would be the most tax efficient way to proceed... thanks

Hello don:

I don't know what your mom's situation is. More details would help. Check out a reverse mortgage for your mother. With one of those, she can stay in the house AND tap the equity for her retirement.

excon

I would also look into the reverse mortgage possibility. I would also consult a tax specilaist about the tax implications of various types of transfers.

I would get some legal advice on this one. If she gifts the house to you, or even sells it at a huge discount, there could be repercussions later on if she needs state help. I know in the uk if you gift like this, and then need to go in a care home etc within 7 years (I think) you may nott get state funding, it can also affect benefit entitlement. Might not be an issue now, but may in the future.

Mom is in her 50s and the medical concerns should not be an issue for 10 or more years.

A reverse mortgage would give her money, yes but that would not put me on the deed and I would eventually have to get a loan to buy the property from her and pay off the reverse mortgage.

I still want to own the house, just want to give her some money which is about 25% of the current value of the house.

She can Gift you up to $10K per year without tax consequences to either of you. So what I would suggest is that she give you a 10% share each year. This would put you on the deed and then you can take a home equity loan to give her the cash she needs.

Gift deed