# Is this a good deal (sell house for $1 to daughter) **URL:** \ **Category:** In My Humble Opinion\ **Created:** [October 16, 2023, 10:11pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677 "2023-10-16T22:11:36Z")\ **Posts on this page:** 19\ **Page:** 3
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [October 18, 2023, 12:17pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/41 "2023-10-18T12:17:40Z")
I need to walk that back a bit. A gifted house can receive a cost basis step up, but it’s usually less than an inherited step up, and there are conditions that must be met. First, the daughter would need to live in the house as her primary residence for at least 2 of the 5 years preceding the sale of the house. She must also have been the owner for 2 of those 5 years. And she cannot have claimed a previous home sale during those 5 years. If those criteria are met, the step up in basis goes to the value of the home at the time of the gift. She’d be on the hook for capital gains on the difference between that value and the sale price (as RTF mentioned). Sorry for the confusion. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [October 18, 2023, 12:21pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/42 "2023-10-18T12:21:16Z")
That’s a reason people sell or gift their house. If the house is transferred and the mother needs long-term care, the Medicaid look back period is five years so it’s better to transfer sooner rather than later. If the house is in mom’s name when she needs LTC , there may be a lien placed against the house. If she sells, she will have to spend down any money before she will be eligible for Medicaid. ---
**Author:** ![Shalmanese](https://avatars.discourse-cdn.com/v4/letter/s/45deac/32.png) [@Shalmanese](https://boards.straightdope.com/u/Shalmanese)\ **Post date:** [October 18, 2023, 12:24pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/43 "2023-10-18T12:24:05Z")
> [@RTFirefly](#): > > The other thing I’d recommend is that the life estate be set up as a contract, signed by both parties immediately before the gift or sale takes place A contract is secondarily about laying out specific remedies available if either party deliberately breaches the contract and primarily about making sure an agreement is as specific as possible so two good faith actors don’t end up accidentally in conflict due to misunderstanding. As mentioned by other posters in this thread, unless there’s a strong presumption of good faith on both sides, a contract is unlikely to be very helpful. Even if one side flagrantly violates the contract, the available remedies are deeply imperfect and likely to cause deep personal & emotional rifts if pursued and anyone halfway smart knows how to not flagrantly violate the contract and just salami slice away in ways that never rise to legal actionability. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [October 18, 2023, 2:08pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/44 "2023-10-18T14:08:44Z")
> [@Hari\_Seldon](#): > > bought it new around 1970 and has had essentially no maintenance since then. > [@Hari\_Seldon](#): > > After more than 50 years, serious maintenance is now required My house is 50 years old, and I’ve lived in it for the past 16 years. We’ve had to have a new A/C put in (the 3rd one, FYI), new floors, partial sewer line replacement, a new roof, and a new water heater. That’s not even mentioning all the little stuff I’ve done myself, like rewired some sockets, fixed sinks/faucets, caulked around windows, and so forth. And there have been other renovations and stuff that didn’t involve broken things- new cabinets, etc… My house isn’t unique either- all the ones in our neighborhood that are about the same age are having roughly the same issues. Enough so, that there are tradesmen who basically specialize in our part of town. I would be **very** wary of a 50 year old house that’s been essentially un-maintained. That might well be a huge albatross around the neck of whoever ends up with it. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [October 18, 2023, 5:22pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/45 "2023-10-18T17:22:30Z")
> [@RTFirefly](#): > > Given the daughter’s reluctance to help out without getting essentially gifted the house, I’d be worried about just how well she’d follow through on her promise to do the needed maintenance. I think it may be unfair to criticize the daughter for not wanting to take on maybe $50,000+ worth of upgrades on her mom’s house, then to have that house lost in a forced sale to pay for long term care. She may be an untrustworthy jerk, but not on the basis of this alone. A similar alternative to the daughter’s deal is to take out a reverse mortgage. You borrow enough to fix up the house, you get to live in the house as long as you want, and the loan (plus interest) is paid off when the house is sold. If the loan principal grows bigger than the house value, your estate is (somewhat) protected by insurance. ---
**Author:** ![filmore](https://avatars.discourse-cdn.com/v4/letter/f/7993a0/32.png) [@filmore](https://boards.straightdope.com/u/filmore)\ **Post date:** [October 18, 2023, 5:41pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/46 "2023-10-18T17:41:50Z")
One thing to keep in mind is that not all maintenance is required maintenance. Fixing something like a leaking roof should be viewed as mandatory, but fixing a crooked cabinet door is not. And certainly doing stuff like upgrading a 70’s kitchen is completely optional. If money is a concern, then doing just the base maintenance to ensure the house is safe and weather resistant may be a better option than moving. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 18, 2023, 8:12pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/47 "2023-10-18T20:12:12Z")
> [@Hari\_Seldon](#): > > After more than 50 years, serious maintenance is now required and she has no money for it. Her daughter does but will not help. But the daughter has offered to buy the house for $1 plus a lifetime rent-free occupancy and guaranteed maintenance. Note that line- \* her daughter will not help\*- then screw her, no way. > [@Riemann](#): > > Seconded. I would be suspicious of the daughter’s motivations. If she is the sole heir, and will inherit the house anyway, why does she insist on title now? > > I think this transaction with the daughter is a can of worms. Even if intentions are good, as @filmore pointed out there are too many things that could change in the life circumstances of both parties. Exactly. > [@doreen](#): > > I don’t think that’s a red flag at all. We apparently aren’t talking about a few hundred dollars. Why would I spend a significant sum of money repairing a house that needs serious work done when I don’t own it and may never own it? Because it’s her _Mother_, and that is what humans do. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [October 18, 2023, 8:39pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/48 "2023-10-18T20:39:17Z")
Happy for you that you have enough money to give your mother possibly tens of thousands of dollars without knowing you will ever be repaid in any way. After all, after daughter fixes the house, mom could sell it and leave the money to charity. Or leave the house/money to the daughter and the estranged brother to share equally. Or sell it and spend all the money. Most people don’t have that kind of money- I know I don’t. I wouldn’t let my mother live in the street- but that’s not what’s being talked about here. Mom can keep her house and take a reverse mortgage or she can sell it and move. ---
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [October 18, 2023, 8:46pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/49 "2023-10-18T20:46:00Z")
Yeah, even if help is ethically or morally demanded, that does not mean one side gets to unilaterally spend thousands of dollars of money that isn’t theirs, even (or especially) within a family. As above, ‘help’ can mean support in securing a loan, or support in preparing the home for sale/finding a new place to live, or something else. ‘Helping’ a family member should not impose a hard requirement to spend a significant chunk of savings a specific way. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [October 18, 2023, 8:46pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/50 "2023-10-18T20:46:44Z")
> [@DrDeth](#): > > Because it’s her _Mother_, and that is what humans do. She has two children getting ready for college. I suppose their educations can take a back seat so that Grandma doesn’t have to sell the house she didn’t maintain for her entire adult life. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [October 18, 2023, 9:08pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/51 "2023-10-18T21:08:15Z")
> [@RTFirefly](#): > > The advantages of giving rather than selling for $1: > > 1. No tax at the time of sale - gift tax is paid by the giver, and in the U.S. that’s part of unified estate and gift taxation. Unless sister’s estate is going to be in 8 figures (which sounds like it’s not remotely a concern) there will be no tax, either now or on her death. > 2. And being a gift, it doesn’t count as income for the recipient. So no worries about taxing authorities saying to the daughter, “you paid $1 for this house, but it’s appraised at $160,000, so you had $159,999 of undeclared income.” > 3. Also, whenever she sells, she gets the stepped-up basis for capital gains purposes. If it’s appraised at $160K now, and she sells it for $250K, she pays the gain on that last $90K rather than on $250K - $1. This is not correct. There is no difference between a “sale for $1” and a gift. A sham transaction at an off-market price is treated as a sham transaction, for tax purposes a “sale for $1” will be treated exactly the same as a gift - the size of the gift being the true market value. A gift is tax-free as part of the giver’s lifetime exemption, but the recipient of the gift does _not_ benefit from the step-up in basis. The recipient of a gift inherits the adjusted cost basis of the giver for cap gains purposes (this is called carryover basis). The step-up in basis only apples to assets inherited as part of a decedent’s estate. This does, in fact, draw attention to why gifting it to the daugher might be a bad idea even assuming everyone has good intentions. If the mother sells the house (her primary residence) on the open market, she will have a tax-free capital gains exemption of $250k. But if the mother gifts the house to the daughter, the daughter will not benefit from the primary residence exemption, and will owe cap gains vs the original cost basis from the 1970s when she comes to sell it. I think these are the broad strokes, but there may well be other complications I’m unaware of, consult a tax professional on this. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [October 18, 2023, 9:18pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/52 "2023-10-18T21:18:31Z")
The more I read the thread, the more I think the idea of selling the house and moving to a retirement condo or apartment makes sense. Even if she were to get a reverse mortgage, instead of relying on her daughter, at her age does she want to be doing all those needed maintenance things? Getting estimates, hiring a contractor, and so on? Why not just take the money and run? There’s usually a market for “fixer-upper” houses, often to young folks who are prepared to put sweat equity into their new home. Selling it also means that she doesn’t have to worry about some sort of personal arrangement with her daughter, which could long-term damage their relationship. Doesn’t sound like the daughter is really interested in the house, but in case she does, give her the right of first refusal at fair market value. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [October 18, 2023, 9:23pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/53 "2023-10-18T21:23:38Z")
It’s unclear from the OP whether this is part of a larger plan to deplete Mom’s assets so she can coast out her final years as a pauper on Medicaid while her assets have been safely transferred to her heirs already. That’s certainly a common maneuver people try. It can even be done legally the smart way, not in a stupid way that screams “DIY wannabe fraudsters.” Without passing moral judgement on whether anyone _should_ do this, just know that doing it wrong can backfire spectacularly, while doing it right can work well. The maneuver being discussed here sounds like DIY deliberate impoverishment to me. With a large side order of just asking for insane levels of family drama if anything goes sideways in the next 20+ years. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [October 18, 2023, 11:10pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/54 "2023-10-18T23:10:27Z")
> [@LSLGuy](#): > > It’s unclear from the OP whether this is part of a larger plan to deplete Mom’s assets so she can coast out her final years as a pauper on Medicaid while her assets have been safely transferred to her heirs already. Now that’s something that never occurred to me, since the Canadian system is different. Maybe that is where the daughter is actually going. Reading this whole thread convinces me she should sell and move to an apartment. Incidentally, there must have been some maintenance. Roofs don’t last 50 years. In fact, I know that at some point sis found a squirrel’s nest in a 2nd floor closet. And at some point, they got rid of the septic tank and hooked in to the town’s newly installed sewage system. ---
**Author:** ![TokyoBayer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tokyobayer/32/13989_2.png) [@TokyoBayer](https://boards.straightdope.com/u/TokyoBayer)\ **Post date:** [October 19, 2023, 4:43am UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/55 "2023-10-19T04:43:24Z")
Families dynamics can be very strange, and it’s not clear why the daughter isn’t wanting to take on the responsibilites of fixing the house. Obviously there are things going on here that we don’t know about. I know that even if I had the money to help my mother fix hers, I would hesitate because of her choices of how she’s spent her money. I agree with the idea of selling the house and getting an apartment. Make it easy for everyone. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [December 6, 2023, 8:59pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/56 "2023-12-06T20:59:09Z")
Update: She’s not doing it. Main reason is that she may want to move and will sell the house for the money she can get for it. Meantime, she will pay for minimal maintenance. ---
**Author:** ![TokyoBayer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tokyobayer/32/13989_2.png) [@TokyoBayer](https://boards.straightdope.com/u/TokyoBayer)\ **Post date:** [December 7, 2023, 12:00am UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/57 "2023-12-07T00:00:12Z")
Has it already been two months already? She made a good decision. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [December 7, 2023, 1:04am UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/58 "2023-12-07T01:04:25Z")
Yes, that sounds like a good decision. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [December 7, 2023, 10:28pm UTC](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677/59 "2023-12-07T22:28:37Z")
Hear here! Even if for the wrong reasons this was the right decision. Bravo!! [Previous page](https://boards.straightdope.com/t/is-this-a-good-deal-sell-house-for-1-to-daughter/991677.md?page=2)