Our homes are one of the largest assets we own, and its not uncommon for our homes to accumulate a substantial amount of capital gain over the 20 or more years that we'll own them.
However, despite planning to continue living in our homes, some of us make the HUGE mistake of transferring ownership to a child or other relative.
Some seem to think (incorrectly) that it puts them on the fast-track to qualifying for medicaid coverage. Others think (again incorrectly) that they are saving money by avoiding the expense of working with an estate planning lawyer to avoid probate.
In either case, instead of saving money, they're blowing a chance for their family to avoid what will amount to an unnecessary 15 - 20% tax upon death when their home is sold.
Example: Based on the value of a home bought in 1970 for $20,000 that is subsequently sold by a during-life-transferee for $120,000, the tax would be at least $15,000.
With a proper estate plan in place and given the same facts, beneficiaries could sell the same home shortly after death (of a surviving spouse if married) with $0 attributable to the same type of tax.
If you are interested in learning how you can have your family avoid unnecessary taxes like this and reap the many other benefits of working with us, click the button below.
