Rental Property Investor · Pittsburgh, PA · Member since 2020 · 17 posts · 3 votes
Good evening! I hope you all are enjoying your Memorial Day.
The situation: my mother-in-law owns a condo with her sisters and they are looking to pass the ownership on to my wife, her brother, and my wife's cousins. The cousins are not children of the aunts, so I don't know if there will be any issue there. I don't know how they hold the deed.
The questions: What would be the easiest way to transfer to the next generation? Can the property be transferred and inherited all at once? Would that be considered a gift instead of an inheritance?
Investor · brentwood, CA · Member since 2016 · 1k+ posts · 730 votes
5y
Does widely divided ownership in a realtively small real estate asset really make sense? Why not give the property to the one person best able to handle it, and then other assets to other folks to equalize as desired, or alternatively simply sell the property at death where there will be no gain and split the proceeds.
Investor · brentwood, CA · Member since 2016 · 1k+ posts · 730 votes
5y
Does widely divided ownership in a realtively small real estate asset really make sense? Why not give the property to the one person best able to handle it, and then other assets to other folks to equalize as desired, or alternatively simply sell the property at death where there will be no gain and split the proceeds.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
5y
For something this big, you should really talk to an attorney and CPA. Here is my layman's perspective.
If the give it to you, you will likely have to pay taxes on the "gift".
If they sell it to you at a substantial discount, you might have to pay taxes if they decided some of it was a "gift". Even if you don't pay then, someday when you sell, you will have a huge amount of capital gains tax.
If she leaves it to someone in her will, after she dies, the heirs inherit the property at a stepped up basis and can sell it with no taxes.
Rental Property Investor · Pittsburgh, PA · Member since 2020 · 17 posts · 3 votes
5y
@Christopher Smith the condo is a place that the family has spent a lot of time at, so there is a lot of sentiment to go with it. I believe splitting it amongst the younger generation would allow everyone to have a place to vacation, with minimal cost.
Rental Property Investor · Pittsburgh, PA · Member since 2020 · 17 posts · 3 votes
5y
@Greg Scott I agree, just trying to get a possible direction to start. It’s not just currently one owner, which makes things complicated for inheritance.
Accountant · Atlanta, GA · Member since 2015 · 1k+ posts · 1k+ votes
5y
Your mother and aunts should talk to their advisors...tax CPA(s) and estate planning attorney(ies) if they want to do this the best way possible.
It's a bit peculiar that they want to give interest to non-children cousins. In doing so they may want to be nice and fair, but they may be unnecessarily complicating the arrangement and creating future problems.
A bunch of individuals holding a gifted or inherited property as straight TIC is often fraught with problems. Even when they're all siblings.
What happens when one or more individuals stop paying their prorata share of expenses, or give you the run-around? What happens when one individual passes and his or her share is inherited by someone not in the family?
Professionals would bring those issues and more up, and offer ways to plan around them.