Today TaxMama hears from Mary in the TaxQuips Forum, who needs clarification. “My mother-in-law put her house in my husband’s name with a quitclaim Deed, which states it would be hers until her death; and he could not sell it as long as she was alive. Now she has passed away and the house is only in his name. Our question is, when we sell the house do we use the date of the quitclaim Deed or her date of death as the date of receiving the property?
Dear Mary,
Please accept my condolences on the loss of your mother-in-law. She sounds like a smart, generous woman.
The version of the deed that she used to transfer the property to your husband was well-thought-out. Because of the way it was written, not transferring full title until after her death, your husband gets the best of both worlds. He got ownership in the house while she was alive. But did not get clear title until after her death.
Since it was an imperfect gift, the advice from Christopher Barra, EA is exactly correct. Your husband does get the stepped up basis (fair market value) at the date of death.
Since your husband owned it on the date of the quitclaim deed, he may use that date as the “purchase” date when reporting the sale of the property.
Be sure to get an appraisal to formally record the value.
And remember, you can find answers to all kinds of questions about estate and gift taxes and other tax issues, free. Where? Where else? At www.TaxMama.com.
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