Let’s simplify. We’d like to help B save on taxes. Short of A paying them. Nobody needs the money until years out.
B may be able to do a 1031 exchange with another real estate investment property but that may require actively managing the investment. (That is, if B takes the proceeds and invests in a rental house, B will have to find tenants.) This article talks about ways one can do a 1031 exchange with a passive investment (not a REIT but other types of investments). B should seek professional advice from someone familiar with the state and local laws.
And actually, given that B’s parents are still alive, they are the ones who may wish to reduce their tax liability, so they would need to seek professional advice if that is their goal. B is not a party to this scenario.
Can’t son A move into “his half” of the house, call it his principle residence and avoid any tax? (other than probate fees)
Or maybe that’s only in Canada where you can do that.
If funds are available at the time, could one or more of the other titled parties simply buy out A’s quarter? Then A gets his tax benefit and the rest of you have at least kicked the can down the road.
Soon A will inherit half. B’s parents do not have a million they may live for decades. At least one of them likely will.
I understand the perceived unfairness of Son A walking away with a million dollars clear, while Parents B will have to pay taxes on their million. (Seen lots of numbers, not sure how they’re derived, but lets assume they have to pay $600,000 in taxes.)
What I don’t see is how Son A or Parents A have done anything at all wrong, intentionally or not, to create this ‘unfairness.’ Couple A and Couple B put the same amount in at the start, presumably they’ve split any repairs/maintenance/taxes/whatever equally over the decades past, and now if the property gets sold for two million, they side (A and Couple B) get a check for the same one million. Seems completely fair to this point.
Having the Federal Government apply taxes to one of the millions and not the other seems unfair and arbitrary, but that is based on laws the Federal Government put into place, and I doubt Couple A or Couple B or Son A or Daughter B had any say in it at all. Why should Son A be expected to make up for the wacky doings of the Federal Government?
To ‘maintain friendly relationships’ seems to be the main argument. But if the relationship was that close, should Couple B be peeved at Son A ending up with $600k more than them? Wouldn’t that be just as much ‘putting money ahead of friendship’ as Son A not wanting to give Couple B $300k for no legitimate reason?
Lots of ‘unfair’ things happen in life. Suppose Couples A and B had used their money to buy two separate cabins? And later on a massive pig farm had been built right next door to Couple B’s cabin. Would Couple A be expected to give some of their own profits to Couple B to offset the reduced value due to the pig farm?
Of course B only gets the stepped-up basis because his parents are dead. Personally, I’d rather have my parents still alive, even if it means a smaller amount. Maybe daughter B is less sentimental.
So you’re suggesting she kill her parents? Well, it’s a new idea to solve the problem.
Actually, what I was suggesting was that she should be happy that her parents are still with her.
Yeah, I realized that. I just thought it was funny it could be taken either way.