Capital gains tax problem.

27 Oct 2025 · 1 min

Watch on YouTube

0:36

In this brief advisory video, the speaker warns against gifting a house directly to a child as a shortcut to avoid probate or Medicaid recovery. He explains that the child would inherit the donor’s original cost basis, making them liable for capital gains tax on any appreciation (e.g., a $250,000 purchase that is now worth $450,000 creates a $200,000 taxable gain). The speaker recommends instead placing the property in a revocable living trust, which allows the heirs to inherit the home tax‑free while also bypassing probate. He ends by inviting viewers to challenge his advice in the comments.

Chapters

Do not give your house to a child. Do not add your child's name to the title. Don't get cute and sell your house to your child for a dollar. I understand you're trying to get around probate, you're trying to avoid Medicaid recovery, but there's another problem looming: capital gains tax. If you bought that house for $250,000, gift it to your child, now it's worth $450,000, and they're going to be responsible for the capital gains tax on $200,000. Put that house in a revocable living trust, leave it to your kids, When you die and they inherit it, they will inherit it tax-free. But with a trust, they avoid probate completely. If you want to fight me, let me know in the comments.