children selling real estate

[taxmom34]

just curious as to what the advantage was for two situations i encountered over the years.
parents signed over their home to children 25 years ago, 3 years ago husband in nursing home and wife moved to rental apartment and 3 children sold the house. they each had to report gain on the sale as they all had their own homes.
why did parents sign over house, they could have sold it and no gain to report. i 'm thinking there was no tax advantage, but maybe it was a legal thing?

[thomtax]

Don't know in this situation, but often if the parent goes into a nursing home, they cannot afford to pay. Therefore the state pays the cost. The spouse continues to live in the home, just as before. However, when the spouse dies, the state goes after the proceeds from the home sale to repay amounts they spent for the nursing home care. And they look to see any transfers in the past few years before the person enters the nursing home. I'm sure that this time period probably varies from state to state.

And remember, 25 years ago, you did not have the $250,000/500,000k exclusions. Plus if they sold the home to someone other than the children, they would have to move.

Don't know if this answers your question, but maybe gives some ideas.

LT

[taxmandan]

Long-term tax planning

This is the hazard with long term planning, tax law changes in 25 years would make the reason for doing something like this a moot point. And in light of current laws we scratch our head and wonder "what were they thinking?" In todays evironment, long term is defined as more than six months!

[Bees Knees]

There are numerous cases where the house is the only substantial asset – one or both parents wind up in a nursing home – the State gets house sale proceeds – kids get nothing. Even with today’s tax rules and the $500,000 exclusion, form the kids point of view, its better to pay tax on the gain from the sale of the house, than to pay zero tax on zero inheritance.

[Burke]

Yes, the kids came out just fine. Only we taxpayers had to pay the bill for the nursing home care, when there was a substantial asset which would have certainly helped the taxpayer afford better care than they received in a state home.

[taxmom34]

these cases came to mind because my daughter recently asked me "if she should put the house in her daughter's name , (she is refinancing) in case something were to happen to them, her daughter would get the house where she could care for her two younger brothers. i advised her to make out a will .