My grandmother has a rental house and the home she lives in which and are both paid off free and clear. Now, her and I want to know how I could escape paying capital gains if/when she passes away.
I was thinking you may be able to hold the properties in an LLC or partnership as my grandmother and I would be partners in the company such that when she passes I’d be the beneficiary of the company assets and would not have to pay capital gains…but I really don’t know if that would work.
Could you please give me ideas on how I could escape capital gains regarding this situation.
Do it the same way most other beneficiaries of an inheritence do it, just wait to receive title from your grandmother’s will upon her passing. As I recall the inherited property will receive a stepped-up basis to market value so your capital gain will be zero on that date. Whatever you do don’t put your name on the title before you inherit the property or you lose the stepped-up basis.
Inheritance by will is one way to bypass the capital gains, but the property would still have to be probated.
To bypass capital gain and avoid probate, have grandmother put the property in a revocable trust and name you as the beneficiary. When she passes, title automatically passes to you outside of probate and you still get the step up in basis.