House Calls: Consult a CPA
I try to hold the "see a lawyer" response down to once a week, but this week's response to keep down could probably be "consult a CPA."
Dear Mrs. Lank: My mother-in-law sold her house in 2016. The house was built in 1955 for $60,000. The house sold for $169,000. There were approximately $75,000 worth of improvements and upgrades done over the years. When the house sold, her takeaway was $129,000after the Realtor commission, the payoff of a home equity loan and the closing costs. The proceeds from sale of house were put into a trust for which my husband is beneficiary. She passed away in 2017. Do we have a tax liability as the beneficiary of the $129,000? -- askedith.com
Answer: I don't know what that trust was like. I don't know the size of your mother-in-law's estate. I don't know whether she qualified for the homesellers exemption on that sale. I don't know how she reported it in her 2016 tax returns.
But in any event, I'm pretty sure you don't have any tax liability.
Confused about VA
Dear Edith: I am paying a Veterans Affairs loan on a house I bought in 2015. When I had my will and trust done, I was informed that my son (who lives with me) could continue making the payments without me transferring the title to him.
I would prefer to sign the house over to him so he would have the advantage of the lower interest rate on the loan. I am 87 and in good health. He and another son have power of attorney, and the other son has no problem with the house staying in this manner, as he has his own home.
I thought you had suggested something in this way in an article I saw several months ago. Do you have any suggestions? I would appreciate any information regarding this issue. -- R. T.
Answer: If you were to give the house to your son, he could take over the VA loan just as it is, assuming his income and credit qualify. He would also take over your cost basis for the property.