I have the same question as you, OP.

I'm considering renting it out because elder person has been out of the house for more than three years, which means they lose out re taxes. Having a mentally ill sibling who slows the process down is very expensive.

Anonymous wrote:It’s much better financially for you and your sibling to inherit the house rather than have your dad sell it while he’s still alive.

This. Unless there is some pressing financial reason, keep the house until death.

If it has increased significantly in value since purchase, rent it out (use a property management company); if the increase has not been huge, then sell.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s much better financially for you and your sibling to inherit the house rather than have your dad sell it while he’s still alive.

+1. On the day of his death, you (heirs) will get a step up in basis to the current value of the home, thus avoiding capital gains tax on the difference between what he paid for the house (less improvements) and current value.

You get $500k of the capital gains tax free so if the house hasn’t appreciated more than $500k you don’t have to worry about it.

More like 250K, 500k is the exemption for a married couple. Saying that you might have 1/2 step up when mom died to step up in basis on the 50% she owned at her death.

Anonymous wrote:

Anonymous wrote:It’s much better financially for you and your sibling to inherit the house rather than have your dad sell it while he’s still alive.

+1. On the day of his death, you (heirs) will get a step up in basis to the current value of the home, thus avoiding capital gains tax on the difference between what he paid for the house (less improvements) and current value.

You would have to make a guess about how long the dad will live, the annual costs he will incur during that time, the expected capital gain in say 5 years, subtract $500k and now multiply by cap gains rate so who comes out ahead.

Annual costs could easily be $20k+…. to mention what happens to the condition of the house as it sits empty and therefore does that reduce its value.

Anonymous wrote:Speaking strictly from a caretaker point of view, advocating for an elderly parent is plenty work. Maintaining an empty house for years is asking for trouble. Also resolving the estate without having to sell the house is much easier. Never mind having to get rid of all of the stuff left in the house that wasn’t moved with the parent. I understand that inheriting assets is better than paying capital gains, but it doesn’t seem worth the additional hassle. This is from a person whose mom lived til 101. She was in independent living for 6 years. That’s a long time to manage a property.

New poster here. I agree with this.

When my parents moved into an assisted living facility (and for my mom, she ended up moving into memory care very shortly after that) we had their house sold. My brother was living closest to them, but even he was over an hour away. My other brother and I were both 1000+ miles from them.

We actually caught a bit a flack from other relatives (my mom's siblings) over selling their house. I think this was for two reasons:
1. They were in a bit of denial and thought my mom would "get better" and eventually move back into her house
2. My parents house was in San Diego, and her siblings (who lived a north east state) liked to come visit in the winter. I think they didn't like that their free place to stay would no longer be available.

Ask dad.

Anonymous wrote:

Anonymous wrote:It’s much better financially for you and your sibling to inherit the house rather than have your dad sell it while he’s still alive.

+1. On the day of his death, you (heirs) will get a step up in basis to the current value of the home, thus avoiding capital gains tax on the difference between what he paid for the house (less improvements) and current value.

You get $500k of the capital gains tax free so if the house hasn’t appreciated more than $500k you don’t have to worry about it.

Anonymous wrote:It’s much better financially for you and your sibling to inherit the house rather than have your dad sell it while he’s still alive.

+1. On the day of his death, you (heirs) will get a step up in basis to the current value of the home, thus avoiding capital gains tax on the difference between what he paid for the house (less improvements) and current value.

Anonymous wrote:

Anonymous wrote:Speaking strictly from a caretaker point of view, advocating for an elderly parent is plenty work. Maintaining an empty house for years is asking for trouble. Also resolving the estate without having to sell the house is much easier. Never mind having to get rid of all of the stuff left in the house that wasn’t moved with the parent. I understand that inheriting assets is better than paying capital gains, but it doesn’t seem worth the additional hassle. This is from a person whose mom lived til 101. She was in independent living for 6 years. That’s a long time to manage a property.

These are good points. We just cleared out an estate house and did an estate auction sale and it wasn’t too hard, luckily we priced a bit low and the house sold quickly and weren’t concerned with making top dollar. Siblings all aligned and no fussing over furniture, photos, jewelry, etc. But one less thing if you can clean it out and sell now.

This is true. We cleaned out our mom's house and distributed everything at that time. It was really nice to be done with that. Mom lived for five more years. We rented the house which helped pay for her living expenses. You have to file taxes on the rental income but if you are filing for him anyway, it's not a big deal. What was a more of a big deal was having several different tenants and maintenance. It takes some time. I would ask for advice from an attorney re the tax implications of selling now or waiting if you don't need the rent. We did need the money and it was nice to have it. She lived very long and was running out!

Anonymous wrote:Speaking strictly from a caretaker point of view, advocating for an elderly parent is plenty work. Maintaining an empty house for years is asking for trouble. Also resolving the estate without having to sell the house is much easier. Never mind having to get rid of all of the stuff left in the house that wasn’t moved with the parent. I understand that inheriting assets is better than paying capital gains, but it doesn’t seem worth the additional hassle. This is from a person whose mom lived til 101. She was in independent living for 6 years. That’s a long time to manage a property.

These are good points. We just cleared out an estate house and did an estate auction sale and it wasn’t too hard, luckily we priced a bit low and the house sold quickly and weren’t concerned with making top dollar. Siblings all aligned and no fussing over furniture, photos, jewelry, etc. But one less thing if you can clean it out and sell now.

Speaking strictly from a caretaker point of view, advocating for an elderly parent is plenty work. Maintaining an empty house for years is asking for trouble. Also resolving the estate without having to sell the house is much easier. Never mind having to get rid of all of the stuff left in the house that wasn’t moved with the parent. I understand that inheriting assets is better than paying capital gains, but it doesn’t seem worth the additional hassle. This is from a person whose mom lived til 101. She was in independent living for 6 years. That’s a long time to manage a property.

It’s much better financially for you and your sibling to inherit the house rather than have your dad sell it while he’s still alive.

Anonymous wrote:Dad just moved into independent living community. House in trust for 10 years now but he won’t be moving back. Sibling wants to sell because there is no one taking care of it yet dad is still paying taxes, insurance - is there any reason not to sell? Parent doesn’t need money to cover the new apartment.

No reason if you don’t plan to rent it out…other than as an investment if you think annual appreciation is a better return after expenses vs taking the $$$s and investing. Probably unlikely that would be the case.

Dad just moved into independent living community. House in trust for 10 years now but he won’t be moving back. Sibling wants to sell because there is no one taking care of it yet dad is still paying taxes, insurance - is there any reason not to sell? Parent doesn’t need money to cover the new apartment.