All Forum Posts by: Eric Bailyn

Hi Katie - Thank you very much for your post.  I truly appreciate how people take time to help complete strangers.

I would like to clarify something you mentioned.  You said that "this can represent BIG dollars".  Were you referring to the the gift tax as potential big dollars, and that this can potentially be avoided due to the parent/child exclusion?

Whether this entire transaction will be a part gift/part sale transaction is something that I don't have a good understanding of, and will include in my discussion with an attorney/CPA.

Thanks Michael.  I just reached out to Brian.

Again...Thanks for taking so much time to help me with my situation.  I'm 100% convinced that I need help with this.  Do you know someone in the San Diego area that you would recommend for helping me with the different scenarios?

Thanks Colleen.  I'm sure you're right about needing to see a lawyer/accountant.

Hi Art - Excellent information.  Thank you very much.

My mother and I are functioning entirely within CA, and the cost basis, for her house, is $305K, It is now worth $850K; therefore, if she gifts us the house, future additional housing increases will incur capital gains tax (as the capital gains are already in excess of the $500K exclusion).  Does it make sense to buy it from her for $475K (or even up to $850, which I'll have from the sale of my house), thereby raising the cost basis, and reducing future capital gains tax.  I would think that avoiding all of the capital gains is preferred over incurring additional property taxes (1.2% per year), but I'm not really sure.

On the other hand, neither my mother or my wife/me have assets anywhere near $11.4M, in fact, both of us are probably in the $1-2M net worth range without any prospect of a substantial change; therefore, I'm not concerned with preserving the lifetime exclusion.

I would really appreciate any further input you may have...

Sincerely,

Eric

Thank you, Andrew.  I re-post my question in the "Finance, Tax, and Legal" forum.  Appreciate the guidance.

Hi Everyone!

My mother would like to gift her $850K house (100% owned; no loan) to my wife & me. At the same time, my wife & I would sell our $1.5M house ($1.4M is equity), and use the proceeds to 1) transfer $475K cash to my mother, 2) remodel her house (which my wife and I will live in) for $150K, build an ADU (which my mother will live in) for $200K, and 3) invest the remainder.

I believe the gifting of the house to my wife & me won't have any tax implications aside from our remodeling that may result in a reassessment with a property tax increase. I'm concerned, mostly, about tax implications that would arise from my wife and me gifting my mom the $475K.

Any thoughts or suggestions about the entire plan?

Thank you very much.

Eric

Hi Everyone!

My mother would like to gift her $850K house (100% owned; no loan) to my wife & me. At the same time, my wife & I would sell our $1.5M house ($1.4M is equity), and use the proceeds to 1) transfer $475K cash to my mother, 2) remodel her house (which my wife and I will live in) for $150K, build an ADU (which my mother will live in) for $200K, and 3) invest the remainder.

I believe the gifting of the house to my wife & me won't have any tax implications aside from our remodeling that may result in a reassessment with a property tax increase.  I'm concerned, mostly, about tax implications that would arise from my wife and me gifting my mom the $475K.

Any thoughts or suggestions about the entire plan?

Thank you very much.

Eric