“My uncle is very sick and I’m his only heir. He’s deeding me his home now to make it easier for me to sell it after he’s gone. Of course he’ll stay there as long as he lives. Is there any downside to what we’re planning to do?”
Answer:
STOP! Do nothing until you consult with a tax professional!
I had a client in this EXACT situation years ago and it cost him a bundle in unnecessary taxes! The man’s uncle deeded him a property just before the uncle passed away. In his case, it was the wrong strategy and cost him a whopping $110,000 in taxes.
You and your uncle need to seek professional tax advice now before you do anything. (I know a great tax attorney if you need one.)
ADDED NOTE: There are other potential risks to the person deeding away part or all of their interest.
1. While the person they deed to is surely someone they love and trust, I’ve heard of cases where that person unexpectedly sold the home out from under them. Rare but possible.
2. A more likely risk is the recipient of the property has a judgment or IRS lien against them and the owed party forces the sale of assets, including the home, leaving the first person homeless.
So before you deed away any ownership in a property, seek tax and legal counsel.
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