CPA advice about realty

[mtnsmith]

We recently were “given” a house by my mother , for all legal concerns. The house was quit claim deeded to me.
Now her CPA is saying that she owes a bunch of money to the irs because of this gift.

The only thing i can find is the possibility of capital gains taxes on me . That has no bearing on her.

Does this sound right? I can’t get the CPA to call me, my mother is old, she gets confused easily.
I told her to hold everything and dont give anyone any money until I investigate it.

She also says we have to present an appraisal of the house...its worth is about $250k right now. Paid $115k .
I did not see any problem with this.

Any help appreciated !
Thanks

Not a CPA but I gifted a 50% interest of a property and just filed a gift tax form and you can get the exclusion from your lifetime inheritance tax allowance. I think that inheritance tax exclusion is about 10 or 11 million now and if she won't be leaving more than then when she passes, easy to use part of it now to exclude the gift above the I think annual 15k tax free gifts. You are not liable for any tax. PM me and I'll look up the forms you will need to file for her. You can fill them out yourself. You will need an assessed value for the property and I used the county tax appraisal for mine.

 

[mtnsmith]

She will not owe a gift tax if you file the correct form, her CPA is either not qualified to be a CPA or a crook. Find another CPA.

 

[MegaFan]

My take on your situation...

• The amount that you are gifted that exceeds the 2020 $15,000 annual limit would be deducted from your mother's lifetime gift and estate tax exemption. Unless she has already used up all of her lifetime exemption ($11 million+), she would not owe any tax on the gift to you. She will, however, need to let the IRS know that the gift of her house exceeded the annual limit by filing a gift tax return (IRS Form 706). For determining the value, I too have used the County appraisal in setting the "gift" value.
• Knowing the current value will be useful to you in the future in determining your adjusted basis in the property when/if you sell it, especially if you DO NOT use it as your primary residence. That will get into the capital gains concern you mentioned if you have not owned and lived in it for two of the previous five years where you can exclude up to $250k ($500k if married and file a joint return) in gains.

 

[GAGunguy]

Don't listen to ODT arm chair accountants, hire an attorney that does estate planning.

 

[MegaFan]

Don't listen to ODT arm chair accountants, hire an attorney that does estate planning.

Good advice if she had not already gifted it, and I assume the quit claim deed recorded, thus giving the OP title to the property.

OP, there is one other concern, depending on your Mom's age and the potential need to use Medicaid to pay for long term care, and if the gift was used to minimize her assets.

If she applies for Medicaid for long term care, whether in an assisted living residence or a nursing home or even in-home care, there is an asset limit to qualify for benefits. In order to be eligible, she cannot have assets greater than that limit. Medicaid has a 5-year look-back period that is meant to prevent Medicaid applicants from giving away assets or selling them at a price that is under fair market value in an attempt to meet Medicaid’s asset limit.

All asset transfers within the look-back period can be reviewed, and if found to have violated this rule, she could be penalized because the assets could have been sold to pay for long-term care.

Note that I am not offering any form of legal/fiduciary advice. My thoughts and ramblings are based on personal experience, having dealt with similar issues in the last ten years for both my Mother and Mother-in-Law in both planning and settling their estates.

 

[41mag]

MegaFan & mtnsmith thank you both for the info !!
I knew someone here had the correct info
This place and it’s people are awesome - I don’t care what anyone says. Even those from other states in a different thread

 

[Hayata]

Note to self: I need an estate planner at some point...

 

[GAGunguy]

Note to self: I need an estate planner at some point...

You need a gun auction... sell me the SOUMI!

 

[GAgunLAWbooklet]

As an aside, a "quit claim deed" is usually not a good way to convey property in Georgia. The best use of such a form (I am told, although I am not a real estate attorney) is to disclaim or give up any interest in the property, WITHOUT making the claim that it is yours alone to give away as you please.

A better instrument for the convenience of real estate is a "warranty deed" -- that's where you warrant or pledge that it is yours to sell or give as you see fit,
and you are choosing to give it to the named person.

At least that's the way I recall it from law school and studying for the bar exam
many years ago. I have not had to deal with that issue professionally since then.

 

[mtnsmith]

If her CPA advised the quit claim deed, another reason to get another CPA.