client just informed me that his mom named him on quit claim deed 6 years ago.(lawyer explained to him that he had property with condition that she be allowed to live there until she died) he has been paying the mortgage, taxes, utilities. Is this considered a rental property or his second home? i'm inclined to think second home and amending to claim interest and taxes.
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I'm inclined to agree with you
Does Mom qualify as his dependent?
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no, she didnt qualify as his dependent. however, she passed away last year and he sold the house. basis is hers $18,000, sold 100,000, so capital gains $82,000. if instead he had inherited capital gain would have been zero. can someone explain to me why people do this to their heirs.Comment
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Was he actually named on the deed or was it set up as some type of life estate?Comment
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it was just a quit claim deed that she signedComment
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As long as he sold the house AFTER she died, he can use stepped up basis. The life estate can be implied. Had he sold it BEFORE she died, part would have been hers to claim based on life estate value (probably no tax) and part would have been his using gifted basis. NATP TaxPro had two good articles on this a couple of years back.Comment
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