Tax Consquence Of Joint Survivorship For Real Estate

[outdoorsman]

What is the name of your state?What is the name of your state?What is the name of your state? Florida

Hello,

I have a question about the tax consequences of receiving property as a joint survivor. My mother had placed my name on her house deed with joint survivor rights. This house was her primary residence and not mine. She died in September 2003 and I then became the sole owner. I decided to sell the house since I have my own place. I had no idea what the house was worth so I had it appraised and then sold it in January 2004. The house was sold for less than the appraised value. My mother had included my name on the deed a number of years ago but I have no idea what the house was worth at that time. Are there capital gain tax issues with this? I would greatly appreciate any information on this. Thanks.

 

[abezon]

Since the house was held in joint tenancy, the full value of the house is included in your mother's final estate at fair market value. Your basis is the house's fair market value on the day of your mother's death.

Since you did not use the house for personal purposes, it is considered an investment. Any net gain from the sale is a capital gain. Any net loss is a capital loss. Both are reported on Schedule D. You can claim capital losses against ordinary income to a maximum of $3000 per year. Your net gain/loss is:
gross sales price
- FMV on date of mother's death
- costs of sale (commission, excise taxes, etc)

 

[johnny__j]

I've been researching this same question. From what I've found, the above advice sounds right, except for the basis calculation. I do not believe the full fair market value at time of your mothers death equals basis. Instead, the basis is the fair market value on only her share of the property, or 50%, since you held it in joint tenancy.

 

[abezon]

No. If property is held by tenants in common, then 50% of the property's fair market value is included in the decedent's estate and 50% receives a step up in basis.

When property is held by joint tenants, 100% of the property's value is included in the decedent's estate & 100% receives a step up in basis. Exception: if the executor can prove the survivor provided consideration for his/her share, only the portion attributable to the decedent's share is included & receives a basis step up.

If the joint tenants are a married couple & live in a community property state, 50% of the joint tenancy property is included in the decedent's estate, but the entire property gets a step up in basis.

 

[taxcurious]

Why isn't the basis 50% stepped up basis at the time of death plus 50% carryover basis on the date of the gift?

 

[Snipes5]

Re-read the above paragraph about joint tenants.


Snipes

 

[taxcurious]

Yes, but shouldn't the daughter's portion be a gift, not an original conveyance to joint tenants?

 

[abezon]

Irrelevant. Any gift tax return should have been dealt with by April 15, 2004. Unless mom's estate was over $1M, it doesn't matter anyway.