Question about name on property taxes

[gator75]

I have a question we live with my aging parents to take care of them they are both alive and well thay pay their property taxes and they own their home. In feb of this year they had their will drawn up they are giving dh and i their house after they pass awayuntil then they still own their house and property. Well the attorney so as its not part of the will and will pass easily to us put us as joint tentats. so the question is this when we received the property tax statement last week it came in mine and dh name can someone explain this?

 

[kiddo76]

Taxes are assessed to the owners of record on the date of assesment. In my town that is April 1. As a joint tenant, you are an owner of the property. Therefore, you are also responsible for the property taxes.

 

[Cheshire Figment]

I would contact the attorney to reverse whatever he did, and it should be done at his won expense. It may even be necessary to charge him with malpractice.

He has just caused you personally many thousand dollars of income taxes in the future if your names on are the title to the house. Talk to an accountant and you will see why.

 

[OKW Lover]

Agree with CF. You need to talk to an accountant and a different attorney.

 

[Sadie22]

You and your parents (if they are able) need to sit down with an estate planning attorney and discuss the ramifications of possible scenarios. In Maryland sometimes parents deed homes to adult children retaining a life estate for themselves. This is just one possibility. Another scenario is what if your and your DH decided to part company, or you passed away before he did. Are there children involved? Are there stepchildren? This is not a simple transaction. Inheriting a house from parents is not the big hassle some think, and it avoids some tax issues. An estate planning attorney can explain all these possible ramifications so informed decisions can be made.

 

[CowboyCO]

I would contact the attorney to reverse whatever he did, and it should be done at his won expense. It may even be necessary to charge him with malpractice.

He has just caused you personally many thousand dollars of income taxes in the future if your names on are the title to the house. Talk to an accountant and you will see why.

Whoa!! Slow down there, Nelly. By adding the children's name to the deed, the house will not be caught up in probate at the passing of the parents, while the rest of the assets do. Unless a Trust has been set up to convey all assets, this would be the proper thing to do. They will receive a bill for the property taxes, but the parents will pay them as normal until they pass. I'm assuming that since the parents have paid their taxes, they will continue to do so. The OP should just touch bases with their parents to confirm they will continue to pay the taxes.

The OP should talk with a tax attorney or accountant to determine any income tax ramifications.

 

[clh2]

My nieghbors had something "maybe'" similar to this happen to them. It was a nightmare.

Her parents changed the name on their house to the 3 adult children. One of the sons died. The parents paid the property taxes for about 10 years.

Then...the parents needed to sell the house. My neighbor and her brother had no clue this had been done. The parents had ASSUMED they would be living in the house until they died.

So - in the title search due to the impending sale - it comes out that the mom and dad technically were not the owners of the house. And...the "1/3-share" for the brother that died - went into his estate - and the widow lived out of state.

All approvals were recieved to sell the house. THEN the "you-know-what" hit the fan. Since my neighbor hadn't lived in the house for whatever the IRS rule is (possible 3 of the last 5 years) they owed income taxes on the portion of the sales price based on their 1/3 ownership. So did the brother and the widow. Then - the parents were a little put out - because they thought that the kids should "allow" the parents to borrow back the money from the sale of the home - so they could move into the assisted living home, so they could continue on in their retirement. However...1/3 went to the widow. 1/3 went to the brother who lost a ton on taxes. And 1/3 went to my nieghbor who also lost a ton for taxes.

Really - the hassle would have been avoided if the parents had met with an estate planning attorney.

 

[gator75]

The last post is correct but there is no trust in place they did it because they didn't want the rest of their kids to come in and take the house after they passed then it won't be hald up in probate, and yes my parents are going to contine u to pay the property taxes until they both pass away.

 

[tina.tina]

In some states there are ramifications for people requesting public assistance who have given away resources- such as 1/2 the equity of their home. This includes those who need Medicaid assistance to pay for long term care.

 

[gator75]

My parents won't need medicaid they have money in an acc for a nursing home if need be. And they did have an estate att do their will this guy knew what he was doing i weas just caught off guard My parents names are still on their title to their house.

 

[Cheshire Figment]

The big problem is what is the cost basis of the house.

Let's say that when the house was bought, especially if the family has lived in it for many years, that it cost $20,000. And let's say that the current value is $250,000.

If you are added to the deed/title on the house you will maintain the same cost basis as you parents had on the house, so after they die and you sell the house any profit that you make will be based on the cost basis of $20,000.

If you are not on the deed/title, when your parents dies it is given to you by will, trust, or act of law, your cost basis will be the fair market value at time of death. So any gain or loss that you have upon sale would be based on that number (let's say $250,000).

That is why this is a severe problem.

Mike (CPA Retired)

 

[kiddo76]

The last post is correct but there is no trust in place they did it because they didn't want the rest of their kids to come in and take the house after they passed then it won't be hald up in probate, and yes my parents are going to contine u to pay the property taxes until they both pass away.

I highly advise that you check with the tax collector when taxes are due to confirm that your parents have paid the property taxes. If a lien is placed on the property, it will be filed under all of your names. This will show up on your credit report and can hurt your credit score. I've seen it happen all the time with jointly owned property when one party doesn't pay the taxes they agreed to pay.

 

[ancestry]

My parents won't need medicaid they have money in an acc for a nursing home if need be. And they did have an estate att do their will this guy knew what he was doing i weas just caught off guard My parents names are still on their title to their house.

I'm confused by this statement. If your parents names are still on the title of the house then their names should still be on the tax bill. If you name is on the tax bill like you said previously then your name is on the title to the house. In the different jurisdictions and states that I have lived in the tax bill has to match the names that appear on the deed.

 

[corndog]

I am an estate planning and probate attorney (and CPA), and I would never do what the OP said was done here, for the reasons that have been stated, and for others that have not been stated.

 

[gator75]

WE where told by the att that as one of them passes away their name falls off the titlem until the lastremaing parent passes then both dh and i name goes on title. As far as parents paying property taxes i know they will be paid because iam an owner on their checking acc and i write the checks out and they sign them.

I also have one other thing. I know that no one can see into the future but i have no intentions on selling my childhood home my parents built it and i intend to remain in it.

The other thing i know is that at no time when they did this did they ever take their names off the title of their home and mine did not go on so i would assume that the tax bill would have remained in their name based on what i have told you. I was under the impression that nothing would be done until their deaths because that is what we where told. The reason that my parents did this was because i have siblings that are being left out of my parents will entirely and they don't want their houseto pass in anyway shape or form to them , and beleive my they would try to figure out a way to do this. They get mothing at the time of their death.

 

[PatsMom]

If the tax bill is in your name, your name is on the deed. The attorney has done something odd for the reasons already given. I am a financial planner and there are a number of issues that can come up from having a child on the deed with you. Much simpler to put the house in a revocable living trust. Its really not expensive and it can make things much simpler, especially if they become incapacitated. A revocable trust will give you no protection as far as a Medicaid spend down goes.

Unless they have A LOT of money in the account, they could have issues with Medicaid spending down if either or both need a nursing home. Average cost in some states is around $80,000 to $100,000 per year. Most of us can't pay that for long. If they have transferred resources, they could be disqualified from assistance. Although your home is generally exempt from spend down as long as there is reason to believe one or both spouses might return to the home, the house is subject to a lien at the second death to recapture medicaid resources.

The situation can be complicated, especially since there are siblings involved. I would consult with a different attorney.

 

[Cheshire Figment]

Also, if your parents do have a will and they want the house to go to you, they can so state that in the will. And if they are going to cut off some siblings, they do not need to mention why but just acknowledge that the siblings exist and it is their intention to not give them anything (or just a token amount). This would make it much harder for them to challenge the will, as opposed to not mentioning them at all.

 

[Swimalie]

The big problem is what is the cost basis of the house.

Let's say that when the house was bought, especially if the family has lived in it for many years, that it cost $20,000. And let's say that the current value is $250,000.

If you are added to the deed/title on the house you will maintain the same cost basis as you parents had on the house, so after they die and you sell the house any profit that you make will be based on the cost basis of $20,000.

If you are not on the deed/title, when your parents dies it is given to you by will, trust, or act of law, your cost basis will be the fair market value at time of death. So any gain or loss that you have upon sale would be based on that number (let's say $250,000).

That is why this is a severe problem.

Mike (CPA Retired)

Listen to Mike! We found this as well when my mother in law decided she wanted my husband's name to be on some of her stock. I checked with our CPA and found out the tax implications. We told my mother in law about how it would negatively affect our taxes and instead of putting his name on the stock, she put it in her will.