So my parents own a house with about $100k left on the mortgage, and they currently rent it out. They’re looking to transfer ownership to me, but I’m not sure what’s the best way to handle this. I’ve heard about trusts to avoid taxes, but it seems like the rules may have changed. Should I speak to a real estate attorney, and if so, how much would that consultation typically cost? Also, for context, I live in Connecticut.
It would help to know why your parents want to transfer ownership. If it’s to qualify for Medicaid, keep in mind there’s a 5-year look-back period.
West said:
It would help to know why your parents want to transfer ownership. If it’s to qualify for Medicaid, keep in mind there’s a 5-year look-back period.
Yup, a lot of people think they can outsmart the system, but the rules are pretty strict about this.
Honestly, it’s better to inherit the house than to have it transferred now. Look up ‘stepped-up basis,’ it can save you a lot on capital gains taxes.
Your parents still have a mortgage on the house, right? They can’t just transfer ownership without dealing with that mortgage first. I’d suggest talking to a real estate attorney or estate planner. They’ll help you figure out if a trust is a better option and advise on any liabilities you’ll take on as a landlord. Also, they’ll make sure your parents’ estate plan is sorted, which could include wills and trusts.
@Palmer
Thanks! I wasn’t even thinking about the landlord aspect. I’ll definitely look into speaking with an attorney.
If they want to give you the house now, a quitclaim deed could work, but transferring the deed and creating a trust are different things. Trusts are more about long-term estate planning. The best route really depends on your goals.
@Wade
Got it. Do you think we could handle a quitclaim deed ourselves, or would we need professional help?
Denver said:
@Wade
Got it. Do you think we could handle a quitclaim deed ourselves, or would we need professional help?
You can do it yourself, but I’d still recommend consulting with an escrow office or attorney just to be safe. Shouldn’t cost more than $100 if you DIY it, but a pro will make sure it’s done right.
I’d suggest speaking with an estate planning attorney. Typically, setting up a trust or doing a full estate plan might cost around $2,500, but it varies.
Devi said:
I’d suggest speaking with an estate planning attorney. Typically, setting up a trust or doing a full estate plan might cost around $2,500, but it varies.
Thank you, that gives me a better idea of the cost! I’ll look into local estate attorneys.
Just my two cents, but inheriting is almost always better because you get a step-up in basis, which means less capital gains tax if you sell it later. Transferring now could cost you more in the long run.