Posted by Tom Martino at 12:00 pm
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So many people want to leave their home to their kids (or other heirs) but do it the wrong way.
They transfer it to them before death. By doing that you can create tax implications for them because the heirs assume the original “basis” of that home.
A basis is the amount paid for the home (plus major improvements).
So when the heirs eventually sell the home, there could be massive capital gains taxes.
It is better to do a “Beneficiary Deed”, which automatically transfers the home to the heirs upon death (avoiding probate). And the heirs get the “basis” or value at the time of death.
That basis is usually higher than the original basis and will lessen potential taxes on a future sale.
Also, by doing a beneficiary deed, you remain in control of your home until you pass away.
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