Gift Your Home as a Large Tax-Free Inheritance
If you own a home, love your children or grandchildren, and have every intention of passing your home to them, here’s an excellent wealth transfer strategy to help you accomplish that and more.
In the normal course of your life, what would happen to the home you’re currently living in after your death? Through your will or trust, you would designate who will receive your home, right?
Let’s suppose your home is valued at $250,000 today. Upon your death, that home will pass on to whomever you design as your heir. It’s value may rise or fall depending on the economy at that time.
But you love your children and grandchildren.
If given the choice, would you want to leave your children or grandchildren a bigger amount of tax-free inheritance or leave them with a smaller amount?
If your answer is, “yes, bigger”, then utilizing a strategy called Legacy Home Wealth Transfer may just work for you.
Here’s how it works:
Let’s say you’re a 70 year old widow, and you own a $250,000 home that is all paid up. You have a 40-year daughter who has 4 children. You get along with them very well and love them very much.
What you would do is you would sell your home to your daughter for $250,000, and she would take a mortgage for the home. You and your daughter could then make an agreement for you to live in the home for the rest of your natural life, and you would make rent payments equal to the monthly mortgage payment.
Why would you do that? Because, you’re going to gift the home to your daughter anyway.
You would then turn around and trade that $250,000 for a Legacy Home Wealth Transfer asset, which may create anywhere from $500,000 to $1,000,000 of wealth transfer benefit. This is 2x to 4x the value of the home.
There would be no tax consequences as a result of this transaction.
Upon your death, your daughter inherits the $500,000 to $1,000,000 wealth transfer benefit, all income tax-free. That’s 2x to 4x the value of the home!
Additionally, if there’s any appreciation in the home, she would also receive that as well, because she owns the home.
This Legacy Home Wealth Transfer strategy can be a tremendous legacy gift from you to your daughter or your loved ones, all through the leveraging of your home.
To learn more about this strategy and see how it can work in your situation, click here to contact us.
