Level 3

Real Estate Beneficiary Deed

Forum|Forum|4 years ago
April 20, 2022
1 reply
11 views

I am retired and part-time now and try to stay away from difficult tax returns. However, I have been approached by a friend concerning a beneficiary deed and wanted to make sure I am giving him the correct information.

He obtained real estate from his mother via a beneficiary deed. My understanding is that the property immediately became his upon her death.

Is this treated the same as a will?

If so, is his basis the value of the property at the date of her death?

More or less, that if he sales close to the time the property became his, it will be a wash sale resulting in little or no capital gains taxes?

Thanks for any input!

This topic has been closed for replies.

qbteachmt

Level 15

MT is one of the States with TOD or beneficiary deed. Even car titles can have it. The property would be basis stepped up for FMV on date of death. This function bypasses probate and wills and even trusts. You might put everything except the real estate in a trust, and TOD (transfer on death) specific real estate to specific parties.

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BobKamman

Level 15

Just be careful that the equity in the real estate isn't needed to pay the debts for which insufficient funds are available from trust or probate assets. And, that the state doesn't have a lien on the property anyway for Medicaid expenses. Generally, people who "mix and match" trusts, wills, TOD and beneficiary designations among their assets, are much more likely to be survived by others dealing with unintended consequences.

N

Ned DevineAuthor

Level 3

I think there are no debts associated with his mother. I think the beneficiary deed probably was done to allow him to sell property more quickly. I just wanted to make sure it didn't change the step up basis and put him in a situation where he would have to pay capital gains taxes. From what I am gathering from both of your replies that this is not an issue and with a quick sale the property value at the date of death and the sale date would not create significant increase in value therefore there would be little to no capital gains taxes. In theory, with the additional cost to sale the property, realtor fees, etc, there could even be a small loss. Am I thinking right?

Thanks

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