Selling parents rentals before death and keep the step-up basis of inheritance

[Chris Dee]

Hi Guys,

It's my first time posting here. So, please be kind :)  I am a buyer. I know a family with considerable real estate holdings who really want to offload the properties.  However, the parents are still alive (but sadly close to the end of life) so obviously the kids would lose the benefit of basis step-up if they sell prior to death.  Does anyone know a way to sell the property prior to death but not be hit with capital gains?  My thought was some kind of lease and option to sell upon death.  However, wouldn't that make me vulnerable if I make considerable improvement to property ? Anyway, any thought would be great.

[David M.]

@Chris Dee

Are you looking at taking possession?  There really isn't to my knowledge.  Go down the estate planning route of trusts or the remainderman life estate deed.  Granted, this is usually without trying to do a sale.  You'd have to have an attorney try to build in a sale somehow.  You really need to wait for the person to die...

Offer a reverse mortgage??

The other way would be to purchase the property from them low, so that they don't have a profit.  Of course, if you turned around and flipped at market value you would be liable for the capital gain --- but you would have plenty of cash to do it.  But, then the sellers would be short lots of cash...

I don't see a way.  Its not pretty...