The Tax Maze

9 Nov 2023 · 1 min

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1:01

In this concise monologue, the presenter warns that parents who want to give their home to a child must avoid common tax traps. Adding a child’s name to the deed or gifting the home outright triggers capital gains tax of 15‑37 % when the child later sells the property. The speaker explains that inheriting the home through a will eliminates capital gains tax, and inheriting via a properly structured trust not only avoids capital gains tax but also sidesteps probate. The overall message is to use estate‑planning tools—wills and trusts—rather than direct deed transfers to prevent large tax liabilities and court delays.

Chapters

If your parents want to give you their home so that you can easily sell it after they're gone, don't get caught in the capital gains tax maze. If you and your parents aren't careful with the way you do this, you could end up owing hundreds of thousands of dollars in tax or more. Here's the way it works. If you add your child's name to the deed along with yours, when your child tries to sell that house after you're gone, they'll be responsible for 15 to 37% of capital gains tax depending on their income and some other factors. If you try to put the home in your child's name alone, same outcome. When they sell it after they're gone, they'll be responsible for 15 to 37% of capital gains tax. The way to do it is to inherit the home from your parents. If they give it to you through a will and you sell it, no capital gains tax. And even better, if you inherit it through a trust, no capital gains tax when you sell it, and you completely avoid the probate court process. If you can inherit the home from your