Legal Question in Tax Law in Illinois

In 2010 my parents, out of state residents, purchased a foreclosure in Chicago for about 107K (no mortgage). That home has been my primary residence since . I have been fiscally responsible for all construction(some gut/remodel, HVAC system, windows and doors, roof repair, etc...) to make the house livable and all maintenance since. We are looking transfer the deed to me or add my name to the deed. Currently it is willed to me. Is there a way to do this and minimize or avoid tax consequences? Currently I can't really file any of my expenses on the home since I am not an "owner".

Asked on 9/08/13, 12:01 am

1 Answer from Attorneys

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Adding your name to the deed, or transferring the deed (by quit-claim deed) directly to you would be considered a gift from your parents.

After the title is transferred to you, you would be able to take the deductions for property tax which would be a benefit to you on your personal income tax.

Gift tax is the responsibility of the person(s) gifting, so there would be no tax or reporting impact on the person receiving the gift.

Your parents would be making a gift of the value of the property (with a basis of the amount that they invested). This would be reported on their U.S. Gift Tax return (Form 709) in the year of the gift. In 2013, the gift tax exemption amount (the amount a person can gift without having to pay gift tax) is $5,250,000. That figure would be doubled for a married couple for a total of $10,500,000. If your parents are under that figure for lifetime gifting, they would be required to file a gift tax return, but not pay any tax.

This answer should not be considered legal or tax advice since there are other factors that, if I were made aware, could change the resulting answer. Please contact your own attorney or tax advisor for advice on how to proceed.

Good luck to you.

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Answered on 9/08/13, 10:22 am

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