DEAR BOB: My parents died within four days of each other in 2005. In their will, their house was left to me. I am their only child. There is still a mortgage, which I have been paying. Can I have the title to this property changed to my name now although there is a mortgage? I am not able to pay off the mortgage balance. How do I handle this situation, as I want to have the title placed in my name and my husband’s name because we are living in the house and will want to sell it someday? –Terri R.
DEAR TERRI: Unless the estates of your parents qualify for an exception, their wills must be probated by the local Probate Court, which will transfer the title to you as the sole heir.
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After you hold title, you should notify the mortgage lender to change the name on the mortgage to you. But the lender cannot call the mortgage due, nor can you be charged a mortgage assumption fee, because you are the offspring of the decedents and are living in the house.
Of course, keep making the monthly payments. After you hold the title in your name, then you can sign a quitclaim deed to your husband for a partial interest if you wish. For more details, please consult a local probate attorney.
NO FEDERAL GIFT TAX DUE FOR LESS THAN $1 MILLION GIFT
DEAR BOB: My parents bought a riverfront property for $360,000 where they planned to build a large house. However, they had difficulty getting along with a neighbor so they decided not to build. Instead they are willing to give the lot to us. I think we can get along with the neighbor as we would build a much smaller house. But my concern is we will have inheritance or gift taxes to pay. Is there a way for them to give us this property without paying taxes? –Krista B.
DEAR KRISTA: Yes. Unless your parents have given away more than $1 million each in assets, no federal gift tax will be due. However, they must file a federal gift tax return with their federal income tax returns. The state where the lot is located might have a gift tax so check with your tax adviser about that.
But no inheritance tax will be due because nobody died.
TRAVEL EXPENSE DEDUCTIONS SEARCHING FOR INVESTMENTS
DEAR BOB: You recently recommended a book whose author described how to deduct travel expenses when looking for investment property to purchase. What is the name of that book and the author? –Victor McD.
DEAR VICTOR: You will find that information in “Real Estate Tax Secrets of the Rich” by Sandy Botkin, CPA, Esq., on page 101. The book is available from local bookstores, public libraries and www.Amazon.com.
However, to qualify for travel-expense deductions when searching for investment property, you must already own investment property. In other words, you can’t take a trip to Hawaii, look at a few potential investment property purchases, and deduct your expenses unless you already own investment property. For more details, please consult your tax adviser.
The new Robert Bruss special report, “Pros and Cons of Investing in Rental House and Condos,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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