Navigating possible estate, tax and transfer implications and tying up loose ends for clients in retirement.

The decision to sell a house is often a complicated, costly, and emotional one. Selling a home in or nearing retirement often has extra layers of complexities regarding taxes and estate planning. Recently, Senior Wealth Manager, Chuck Ebersole shared a story of how he helped a client navigate a decision relating to selling his California home where he spends part of his time (but not all of it!). This client’s main decisions focused on whether to sell it or gift it to his children.

Chuck helped him by asking questions aimed at determining how much capital gains tax he could owe based on what he initially paid for the property, how much money he had put into it and what it is likely worth now. They also discussed the number of years he has used this home as his “primary residence” (as he owns another property in Washington). The client was surprised to know that the first 500k profit is not subject to capital gains tax.

They also discussed how gifting or transferring property to the children could keep their (original) “cost basis”, thereby avoiding a “step up” in cost basis of the home and how that could affect taxes and other items. The discussion is a good example of the many blind spots and complexity an advisor can help bring clarity and solutions to when dealing with subjects such as these.

The information above is for illustrative purposes only and nothing herein should be interpreted as investment or tax advice. It should not be assumed that future performance of any specific investment or investment strategy will be profitable and each strategy is based on an individuals specific situation, risk tolerance and other factors. If you or someone you know would benefit from speaking with a HoyleCohen Advisor, we encourage you to reach out.