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Parents shouldn’t place kids’ names on real estate

Unless occupancy rules are met, capital gains tax may be huge

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DEAR BENNY: Twenty years ago my mother placed my name on the deed to avoid issues when she passed on. Will the IRS treat this as inherited property or consider it investment property? Did I inherit her half of the property? --Theo DEAR THEO: Why, oh why, do parents do this? For example, let's say your mother and father bought their house years ago for $20,000 (sounds great but that was a lot of money then). For tax purposes, your parent's tax basis was $10,000 each. Your father died 20 years ago, when the house was worth $40,000. Under a legal concept called the "stepped-up basis," the market value on the date your father died was added to your mother's basis. Thus, her basis would be $30,000 (her original $10,000 plus half of the $40,000). Did your mother add you to title or are you the sole owner? I did not understand your question. A very strict tax rule is that the basis of the person giving the gift (the donor) becomes the basis of the receiver (the donee). So, if my calculations ...