Jerry Taylor explains why gifting your home to a child while alive is a tax mistake. A house bought for $150,000 now worth $650,000 means your child inherits a $500,000 capital gain and owes tax on it. Use a revocable living trust instead to pass the home tax-free at your death.
Do not transfer your assets to your kid's name. It may have seemed like a good idea at the time, but it's not. And this is especially true when it comes to your home. Let's say you bought your home years ago when it was $150,000. Now the house is worth $650,000. If you give that home to your child and put their name on the deed, when they try to sell it, they're going to have to pay the tax on that capital gain of $500,000. Here's the solution. Instead of giving in the home while you're alive, put it in a revocable living trust. That way when you die, they will get your tax basis in that home and owe no capital gains tax. And the home will pass to them outside of probate court. Jump on my newsletter
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