Mitigate capital gains tax

My parents own a rental property in NJ with no mortgage & zero basis. To mitigate capital gains tax if my father predeceases my mother & she sells the property, I was thinking of updating the deed with just me & my father (removing my mother) so I'd get the stepped up basis on the sale. Is this a good strategy & how can I go about removing my mom from the deed & replacing with me?


Asked over 7 years ago in Wayne, New Jersey
Categories: Real Estate  Wills, Estates, Trusts

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Zaher Fallahi

Answer by Zaher Fallahi

VerifiedCalifornia lawyer


Removing mother’s name from the deed and adding your name instead, provided that she actually signs the new deed and her signature is notarized, may be construed as you getting her share as a gift, which carries her basis of zero. Or, it may be interpreted as you getting her share and ½ of dad’s share as gifts, at zero bases. Either way, this could be the worst tax option. Because Virginia is not a Community Property State, any ownership may be “Joint”, and at the first death, only one half is stepped up. Generally, any gift carries the donor basis. Your best tax-wise alternative may be to inherit the property from both parents, at the stepped-up value. Good luck.

Posted over 7 years ago

Respectfully, The Law & CPA Offices of Zaher Fallahi Zaher Fallahi, Attorney At Law MS, MBA, JD, CPA 10866 Wilshire Blvd., Suite 400 Los Angeles, CA 90024 Tel.: (310) 719-1040. 650 Town Center Drive, Suite 880 Costa Mesa, CA 92626 Tel.: (714) 546-4272 or 4CPA Fax: (714) 546-5526 Website: zflegal.com e-mail taxattorney@zfcpa.com

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