c wong wrote:
- quote -

You've got a mix of capital-gains tax questions and estate-gift tax
questions, none of which can be answered here because they're
sufficiently complex (and the dollar amounts are big enough) that you
need to get an estate-planning attorney involved.

Generally: you're more or less on track regarding gains on sale of the
home...residence required for 2 of the past 5 years, $250k gains
exclusion, basis was probably stepped-up based on CA rules. The harder
questions regard the estate & the reasons to gift (if there are any).
Gifting away appreciated assets gives up one of the tax benefits of
inheritance, step-up of the basis of the property. And of course at this
point the $1.5M estate isn't an estate, so there are elder-care kinds of
issues to consider (perhaps planning for an extended infirmity?). Not to
mention, why exactly would she gift 2/3 of her wealth to you & your
brother right now, is it her idea? There's always the question of other
relatives, capacity, "undue influence", etc. Not to mention Medicaid issues.

So bottom line is I'd recommend asking around for a good estate planning
attorney in your area.

As for SF rent control...lots of rules to consider, try here for a start:
http://www.sfgov.org/site/rentboard_index.asp
Basically, if it's covered by the rent control ordinance, annual
increases are limited to the rent control rate (usually a couple-few
percent per year). As big a concern - probably bigger - are the general
landlord-tenant rules that apply in SF. At the moment the rental market
is a bit soft so if you think it's going to be a short-term rental, you
might not want to bother with the potential hassles. Could someone in
the family use it for awhile?

-Tad

On Sun, 9 Nov 2003 15:13:57 CST, "BMS" <mcfared[at]comcast.net> wrote:

- quote -

True - yet another reminder that everything has a price.
Nevertheless, all things considered, I usually go with the bird in the
hand. <grin
-HW "Skip" Weldon
Columbia, SC

Go get an estate planning lawyer. If you put the house in your names now
you will inherit a tax bill.


"c wong" <cwongc2002[at]yahoo.com> wrote in message
news:b39a0282.0311090733.40f2f2c0[at]posting.google.com...
- quote -

"c wong" <cwongc2002[at]yahoo.com> wrote in message
news:b39a0282.0311090733.40f2f2c0[at]posting.google.com...
- quote -

You need to go see a local attorney specializing in estate planning
IMMEDIATELY.

The money spent on proper legal help is pennies on the dollar compared to
what Uncle Sam is going to charge the estate is you try to do it yourself.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

My mom is 75 years old and is slowing down quite a bit. I moved her
out of her house in SF about 1 year ago to be closer to me in
Sunnyvale, and her house in SF has been vacant. My brother and I need
to decide what to do with it, rent it or sell it (SF has rent control
so any advice on this would help as well). Her total estate is
probably worth $1.5M.

As I understand it, if she passes this year, the first $1M of her
estate are tax free. If she passes 2004 or later, the first $1.5M of
her estate are tax free. So I believe these are the options:

1) Mom gives the property to us - If she passes this year, the $1M is
considered a one time exclusion for gifts and inheritance (basically a
lifetime of up to $1M can be gifted while she is alive without any tax
consequence). She can gift up to $11k per year, per person without
having to report anything.

So say the SF house is $650 and she gives it to us. She would have to
file a gift tax return of $628 ($22k is exempt meaning $11k for my
brother, $11k for me) and if she would have $372 left to gift. (I
wonder if this would be capital gains for us and therefore taxed? If
we turned around and sold it, would we would get capital gains since
we cannot claim the $250k capital gains exclusion since it is not our
primary residence?

2) Wait until she dies - If we waited until she died and then
inherited the property, we would get the stepped up basis. Which
means the market value becomes the basis and if we sold it the next
day, we wouldn't get any capital gains.

3) Mom sells herself, then gives to us - Say mom and dad purchased it
for about $30k. When dad died, say the house was worth $300k (we
would need an retroactive appraisal??). So the basis became $300k.
If mom sells it for $650, she has $350 in capital gains. Everyone has
a $250k exclusion, so she would get taxed on $100k. We could bring
that number down with repairs or remodels (anything else to reduce
this gain??).

The other gotcha is that the exclusion is only if it is her primary
residence, I think for 2 out of the past 5 years because it has to be
considered her primary residence. Is this right? I think her living
in the apartment is fine because it doesn't have to be reported. If
we rented her house, it would have to be reported to the IRS.

After she sells it and gives us the proceeds, do my brother and I have
tax consequences or does that follow the same gift tax rules in option
1?

Summary?? Option 1 would be the best if she were not to live to 2004
to bring her under the $1M exclusion. She most likely will be fine.
My brother and I would have a tax consequence if we sold the property.
Option 3 will have a $100k capital gain tax for her. My brother and I
might have a tax consequence if we received the proceeds.
Option 2 sounds the cleanest, since we not in desparate needs to the
funds. If we rented it in the meantime, what are the SF rent control
issues?

Any validation of this would be greatly appreciated!

Thanks,
Carol