Posted on 01/06/2013 11:03:40 AM PST by dhs12345
My dad is in a nursing home and we need to sell his house to pay expenses.
We have researched the tax laws and apparently, the threshold is $250K for capital gains. Anything above $250K is taxed at the capital gains rate. What is is now, 28%?
This seems unreasonable but apparently true. At one point, I thought that all value for the place of residence could be excluded. Or the threshold was very high.
My dad is by no means rich and he has lived in the house fifty + years.
There are a lot of Financial Advisors out there and I've been down that path and basically got scammed.....USE A CPA
If your below 400,000 agi. Cap gain for Feds should be 15 percent
Two possibilities, first try to look into reverse mortgages, to find a reputable company. This can work in several ways, as a lump sum payment, or as a monthly payment that just offsets his expenses, which is probably better. This *may* also offset much of the capital gains taxes as well.
You do need financial-legal advice to see if it would be better to set up a family trust, with the house being the major asset in it, along with cars and other assets, which avoids inheritance taxes as well.
Importantly, you also need to do all this while he is of sound mind, when he can also assign you power of attorney that sits idle until he is incapacitated. If he has a safe deposit box, it also should have other authorized signers for it, so it will not be sealed immediately when he dies.
The gov't needs to be disabused of the notion of taxing people on numerical gains due to inflation, especially for assets held for decades.
It's past time to get those bozos straightened out.
Iirc most trusts do not protect assets from estate tax. Only know one, charitable remainder trust.
However, this scenario does not seem to put them into the category to have estate tax exposure.
Excellent advice. I would also add to look for an attorney who specializes in elder law.
What you don’t want is to find some attorney who advertizes in the phone book or on TV who claims to do everything; i.e.; divorces, bankruptcy, personal injury, workers comp, criminal law, wills, estates, etc. Instead find a lawyer who specializes in elder law. Same with an accountant. Make sure any accountant you deal with is not just a glorified bookkeeper/tax preparer who is also an insurance salesmen and “investment advisor” – and sadly some are just that – stay away from them!
Also don’t discount the value of a good and experienced real estate agent. While a real estate agent isn’t going to give you personal tax or legal advice, he or she should be aware of the legal landscape of selling a home belonging to someone in a nursing home and will be able to, along with an appraiser if necessary, come in and assess the true and reasonable market value of the home given the comparable market in that neighborhood and come up with a realistic selling price up front so you will know what to expect.
A good and experienced real estate agent will also be able to tell you if the home needs some simple improvements that will help it sell faster if a fast sale is a primary concern or what you might have to do over and above that to get to the selling price you want given what other similar homes in the neighborhood are selling for.
Try to find a real estate agent in your area who has a long experience of selling homes like your father’s and in dealing with situations similar to yours.
Very unlikely that he will be able to trade down. He is incapable of living alone and the plan is for him to continue living in the nursing home.
The key word is PROFIT. Take what was paid for the house, add cost of improvements (roof, heater, AC, etc.) and subtract from proceeds. That is capital gains. No profit, no tax.
Thank you.
We have found an agent and she is very good (so far). We are expecting an as is sale.and there is a very good chance that we won’t have to do any improvements since demand is high in the area.
We have already set the value and are aware of a the tax laws generally.
Couldn’t agree with you more! It is outrageous that government deliberately inflates the currency, destroys out lifetime savings, then, adding insult to injury, charges us for the inflation THEY caused. That injustice really makes me angry.
It’ll all be moot when inflation hits 30% or 40% per year (or worse). Then all of our wealth will be transferred to the great unwashed masses.
Find a really good CPA — pay them what they’re worth - probably upwards of over $500 an hour... worth every penny. Try to find one that specializes in issues dealing with the elderly - there might be other things you need to know... might as well use up the whole hour.
Find a really good CPA — pay them what they’re worth - probably upwards of over $500 an hour... worth every penny. Try to find one that specializes in issues dealing with the elderly - there might be other things you need to know... might as well use up the whole hour.
Also lawyers who deal with the elderly charge less and often have great advice. My very limited experience is that the very best are often cheaper in the long run. They’re not doing on the job training and they know their stuff so well you won’t be charged for ‘research’... You’re in my prayers.
Thank you.
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