"thetaxdon" <thetaxdon[at]yahoo.com> wrote:

- quote -

It sounds like you are talking about a "life estate deed."
This is where the owner of real estate transfers the deed
while alive but retains the right to use the property as
long as they are alive.

And with the current housing market we, especially us
professionals, need to be cognizant that it is not a "STEP
UP" in basis, but rather an ADJUSTMENT to basis that occurs
when the property is inherited upon the death of the
original owner. It is entirely possible that the value of
the property has declined. And what happens at death is
that the beneficiary gets the Fair Market Value of the
property which may be higher or lower than the original
cost.

Gene E. Utterback, EA, RFC

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"Phil Marti" <prm20871[at]verizon.net> wrote:

- quote -

Technically correct. However according to the IRS the amount
that a joint tenant "owns" is the amount he originally paid
for. If someone owns a property outright and adds another as
a joint tenant for no consideration, it is not considered a
current gift. Instead the entire value of the property will
be included in the donor's taxable estate, and the donee will
have a stepped up basis in the entire property.

Stu

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thetaxdon wrote:

- quote -

AFAIK, the beneficiary deed (which is not available in all
states) is merely a Probate avoidance tool, similar to TOD
or POD designation on bank accounts. It comes into effect
on or after the death of the owner, so should not affect
whether the property gets a cost basis adjustment or not.

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"thetaxdon" <thetaxdon[at]yahoo.com> wrote:

- quote -

I've never heard of a "Beneficiary Deed," nor will you find
such a creature in tax law. If the grantee inherited the
property it comes with a stepped-up basis. If the property
was held in joint tenancy with right of survivorship, the
survivor gets a stepped-up basis on the part inherited while
retaining his original basis in the part he already owned
(ignoring community property considerations).

--
Phil Marti
Clarksburg, MD

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Does property transferred by a "Beneficiary Deed" upon the
death of the owner receive a step up in basis? I would
think so, but have heard the IRS has challenged (may not be
true) the step up. The Beneficiary Deed provides for a
beneficiary for real property after the death of the owner.

Don in Colorado

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >