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My father did a lady bird deed and named my sister and I on the document. He passed recently. We would like to sell the property. No mortgage, Would we have to pay capital gains on the net proceeds from the sell? And if we do have capital gains, instead could we hold on to the property for 2 years to avoid capital gains?
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Although you should consult with your accountant to confirm, a properly prepared enhanced life estate deed, also known as a lady bird deed, is not a completed gift upon execution because the grantor retains the right to revoke the beneficiaries remainder interest. Therefore, the remainder beneficiaries should receive a stepped-up basis in the property. This stepped-up basis is the fair market value as of the date of death.
Answered on Jun 22nd, 2016 at 7:32 AM