There are a few ways that a parent can transfer a home to a child tax-free, but the methods of doing that can be complex and require careful planning. This article discusses some of the different techniques that homeowners can use to transfer a house to an heir. The method that a person chooses to adopt will depend on their individual personal and financial circumstances. A person might choose to stay in their house so that their heirs can enjoy a stepped up tax basis. Another technique involves giving the home away as an outright gift, but the homeowner will want to think about the gift-tax exclusion. The homeowner might also consider selling the house to a relative or heir at a bargain price. If a person wants to get the benefits of being a resident without having the home included in their taxable estate they might think about getting a qualified personal residence trust (QPRT).
See Bill Bischoff, How to give your home to your children tax-free, Market Watch, December 22, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
