House Cost Basis

This is impossible. Until we know exactly what happened, no one can answer your question.

Because father retained a life estate, friend did not have free and unencumbered use of the house, certianly could not transer full title, and so this was not a completed gift.

Leading to a cost basis of FMV on date of death.

----- Original Message ----- From: "Phil Marti" Newsgroups: misc.taxes.moderated Sent: Sunday, March 02, 2008 8:48 PM Subject: Re: House Cost Basis

: "Billy" wrote: : : > My friend's father deeded over his house to my friend in 1980 with the : > right to live in it till death of the father. : : This is impossible. Until we know exactly what happened, no one can answer : your question. : : -- : Phil Marti : Clarksburg, MD

Father put sons name on deed as owner of property but father has right to stay in house till death. 1980

Father died in 2006, son sold house in 2007, what is cost basis? The 1980 transaction or date of death value?

I dont know why this hard to comprehend.

It may depend on the father's basis.

As a non-expert and un-studied guess, assuming the deed change was a gift, I would guess the basis would be the lower of the father's basis or (the value in 1980 reduced by the factors of letting somebody stay in the house for the life expectancy of the father at that time).

So in other words, I expect the basis is much lower than either of your first two alternatives. However my ideas may be quite wrong.

Wouldn't that only apply if the gift was revocable?

Absolutely correct.

Depends on what you mean by revocable. If it was considered by the law to be a "completed gift" then the donee takes the donor's basis and there is no stepped up basis on death of the donor. If it's not a "completed gift" then it's the opposite.

Stu