Wednesday, January 25, 2012

Giving Your Home to Your Children Can Have Tax Consequences

Many people wonder if it is a good idea to give their home to their children. While it is possible to do this, giving away a house can have major tax consequences, among other results.

When you give anyone property valued at more than $13,000 in any one year, you have to file a gift tax form.

Also, under current law you can gift a total of $5 million over your lifetime without incurring a gift tax. If your residence is worth less than $5 million, you likely won't have to pay any gift taxes, but you will still have to file a gift tax form.  (And Congress may change the gift tax exemption, which is now scheduled to revert to $1 million at the end of 2012 unless Congress acts.)

While you may not have to pay gift taxes on the gift, if your children sell the house right away, they may be facing steep taxes. The reason is that when you give away your property, the tax basis (or the original cost) of the property for the giver becomes the tax basis for the recipient. For example, suppose you bought the house years ago for $150,000 and it is now worth $350,000. If you give your house to your children, the tax basis will be $150,000. If the children sell the house, they will have to pay capital gains taxes on the difference between $150,000 and the selling price. The only way for your children to avoid the taxes is for them to live in the house for at least two years before selling it. In that case, they can exclude up to $250,000 ($500,000 for a couple) of their capital gains from taxes.

Inherited property does not face the same taxes as gifted property. If the children were to inherit the property, the property’s tax basis would be "stepped up," which means the basis would be the current value of the property. However, the home will remain in your estate, which may have estate tax consequences.

Beyond the tax consequences, gifting a house to children can affect your eligibility for Medicaid coverage of long-term care. 

There are other options for giving your house to your children, including putting it in a trust or selling it to them. Before you give away your home, consult an elder law attorney who can advise you on the best method for passing on your home.

This article was reprinted with the permission of

Monday, January 23, 2012

TSA Sets Up Hotline for Air Travelers With Disabilities or Medical Conditions

Concerned about negotiating the airport security checkpoint with a frail elderly or disabled traveler? Now there is a dedicated hotline that travelers with disabilities or medical conditions and their families can call with questions or concerns about the security screening process.

According to the Transportation Security Administration (TSA), the new hotline will provide travelers with information about navigating often arduous airport security checkpoints. Although not spelled out in detail, the TSA's press release seems to offer hope that by calling 72 hours prior to arrival at the airport, travelers with disabilities or medical conditions will somehow be able to notify airport security officers of their trip, with the hope that those officers will be better prepared to handle their needs when they actually reach security.

The hotline, which has been named TSA Cares (presumably because the TSA is trying to counter numerous incidents where elderly or disabled passengers encountered problems at checkpoints), is available Monday through Friday from 9 am to 9 pm EST at 1-855-787-2227.

"TSA Cares provides passengers with disabilities and medical needs another resource to use before they fly, so they know what to expect when going through the screening process,” said TSA Administrator John Pistole. “This additional level of personal communication helps ensure that even those who do not travel often are aware of our screening policies before they arrive at the airport.”

Mobility International, a foreign exchange organization for people with special needs, offers a host of tips for navigating airport security on their Air Travel Tips for People with Disabilities page.

This article reprinted with permission from