Three Daughters Must Divide a California Property

[Gary Moore]

My first post - ever! Unfortunately, my mother-in-law suffered a stroke last week and is currently in the hospital. It's likely she will not regain use of much her right side. This makes it very unlikely she can return to her tri-level home once she leaves the hospital. I'm hopeful that the BiggerPockets community can help us with ideas to put grandma in a better place, while minimizing what Uncle Sam takes for deficit spending.

Three daughters, A, B and C are equal recipients of a home in Northern California which is in a trust. They have power of attorney with the mother recovering from a stroke. There is roughly $750K in equity in the home ($950K home with $200K mortgage), which grandma has owned for 3 decades. The home is a tri-level and is not suitable for grandma to return home to.

Idea 1

Daughter A, wants the house. If the house were sold to daughter A and then daughter B, used her $250K in proceeds to go and buy a home for grandma to live in, while daughter C just took her share in cash.

Idea 2

House is sold to a regular buyer. Daughters A and B each go and buy a new home, while C takes her $250K in cash.

Any ideas on how to minimize taxes with either of the two ideas above, would be greatly appreciated. The sisters all trust eachother, so this allows for greater flexibility in doing something unique. Can't wait to see what ideas roll in. Happy Thanksgiving!

Many thanks,

Gary