Minimizing Tax in Gift/Transfer and Sale of a Gifted Home
My great aunt sold my mom a home for $1 in the early 2010s, so my mom owns the home outright with no mortgage. It is now valued at $460,000. As part of her estate plan, she wanted to leave me the house. However, she decided that she wants to enjoy the proceeds with me while living, so she wants to either: - [ ] Somehow sell the home and - [ ] Gift me $200,000 of the proceeds to use to pay off debt, and - [ ] Gift me the remainder to use to buy a new, larger home in which both she and I live, and on which I pay the mortgage (so I can help take care of her after Dad passed away a few years back). Or: - [ ] Gift me or a trust the home directly to then sell to accomplish the same as the above. How can the above happen with the least tax consequences? Ideally, we wanted to put the house or funds in a trust of some sort to protect her (I.e., ensure she has partial ownership but the remaining equity transfers to me when she passes, ensure I’m required to use the first $200,000 to pay off debt, etc.), but if some sort of sale by her, gift to me, 1031 exchange, etc. is more tax-efficient, we’d prefer to go that route and accomplish the “protection” by other means or contracts.
