Help! Easiest way to transfer ownership of my Mom's Home

[Sophia Berry]

Hello all,

I wanted to refinance my mothers home in my name however, apparently according to my conventional lender, she would have to sell the property to me and I would have to complete the transaction as a purchase. That won't work because I would have to have 15% in reserves.  My plan is to use the equity and purchase investment properties. The balance on the home is 72K however the home is now worth 425K.  The property is located in California.  Any advise needed I am just trying to figure out the easiest way.

Thanks.

[Steve Vaughan]

The easiest way is to have her quitclaim the house to you.  That's also the easiest way to give your mom a gift tax bill of 55% of any amount  above $15k.  Not done properly , this could end up costing your mom a tax bill of $150k+.  

Get professional tax help. It's not hard for her to reduce this gift amount from her lifetime estate exemption, but consequences are dire if you don't.  

Gifting it to you now will also give you her cost basis.  Maybe $300k in capital gains? Inherit it if you can.

The proper way is to inherit this property at it's stepped-up basis, or for her to gift the equity to you after involving an estate planning tax attorney/CPA.  

She could also get a Heloc and lend you the money.  My Heloc was simple and only costed $300.  Nice gift!