Consult a tax planner as well as an attorney. That capital gains hit could be a killer. My folks bought their house in 1969 for $45,500, and it's worth almost $2 million now. If my mother put me on the title, I'd pay a fortune in taxes.
However, I'm her Trustee and hold durable POA, so I can sell it for her if it was necessary. When my dad died, her cost basis went up to the value it was on his date of death (11/2018), so if we sold it, she'd pay capital gains on the difference between the value in November 2019 and now. The $45,500 cost basis is gone now. If my brother and I inherit the house, our cost basis will be the value on er date of death, and we'd pay taxes on the difference between that and the sale price.
It gets complicated, as you see, so tax planning advice is vital before you do anything.
I’d consult with an Elder Law attorney who is able to advise you options for Medicaid planning. This should be done ASAP. Also explore tax consequences.
I don’t know why you would want to own a home with someone else. It’s opening the door to possible disasters. Take more time to think about your desire to do this. Look for other possibilities to aid in acquiring a home.
jon, I assume the Deed has not be changed? Correct?
One draw back of a parent placing a grown child on a Deed to their house is when the parent passes, and later you sell the house. For Capital Gain Taxes, the basis used goes all the way back to when your parent had purchased the house. If the house has grown in value over the years, you would be responsible for the Capital Gain Taxes when the house is sold.
Tax wise, it is better to inherit the house. That way the basis used for Capital Gain Taxes only goes back to the day you inherited the house.
As Grandma1954 posting, contact an "Elder Law Attorney" to see what is the best approach for your State laws. And if Medicaid is part of the mix [different from Medicare] that could throw a possible wrench, such as a lien.
Really you should contact an Elder Care Attorney to determine the best way to do this so that you are protected and your parent is protected and that joint ownership does not create a problem later if there needs to be an application for Medicaid. While you are getting that done other important paperwork like POA for Health, Finances, Advance directives, Trusts if needed, Will and a whole slew of other important items.
However, I'm her Trustee and hold durable POA, so I can sell it for her if it was necessary. When my dad died, her cost basis went up to the value it was on his date of death (11/2018), so if we sold it, she'd pay capital gains on the difference between the value in November 2019 and now. The $45,500 cost basis is gone now. If my brother and I inherit the house, our cost basis will be the value on er date of death, and we'd pay taxes on the difference between that and the sale price.
It gets complicated, as you see, so tax planning advice is vital before you do anything.
One draw back of a parent placing a grown child on a Deed to their house is when the parent passes, and later you sell the house. For Capital Gain Taxes, the basis used goes all the way back to when your parent had purchased the house. If the house has grown in value over the years, you would be responsible for the Capital Gain Taxes when the house is sold.
Tax wise, it is better to inherit the house. That way the basis used for Capital Gain Taxes only goes back to the day you inherited the house.
As Grandma1954 posting, contact an "Elder Law Attorney" to see what is the best approach for your State laws. And if Medicaid is part of the mix [different from Medicare] that could throw a possible wrench, such as a lien.
While you are getting that done other important paperwork like POA for Health, Finances, Advance directives, Trusts if needed, Will and a whole slew of other important items.