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I currently live with my mother, and the house is under her name.

However, I pay for the property tax (house paid off).

In regards to property tax reductions. If I will be continuously paying the property tax, will there be more tax deductions if I put the house completely under my name, versus doing a joint ownership?

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  • 2
    Do you currently itemize deductions? – Hart CO May 14 at 20:53
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    Ma Hubbard gifts her son Adam her house. Adam marries Beth. Adam dies. Beth gets house, with Ma Hubbard still living in it. Beth re-marries to Chuck. Beth dies. Chuck gets house with old Ma Hubbard still living in it. Chuck doesn't know Old Ma Hubbard from Adam, and evicts her. – Strawberry May 15 at 14:18
  • @Strawberry - We are trying to enforce "too good to be a comment" - please consider deleting it, and write it as a full answer to the question. See the meta question Should answers be left in the comments? for more details. – JTP - Apologise to Monica♦ May 15 at 14:37
  • @JoeTaxpayer I don't have adequate knowledge of tax and inheritance law in the US (or anywhere) to substantiate that comment. It seems like a plausible scenario to me, but feel free to delete if you think it doesn't belong. – Strawberry May 15 at 14:44
  • No. It does. You can literally copy/paste it, and I’d revisit and add a line or two, and it would be a valid warming to those contemplating this transfer. On reflection, what was so appealing about your answer/comment was that it was another “unintended consequence” and supports my ongoing warning to not let the tax tail wag the investing dog. – JTP - Apologise to Monica♦ May 15 at 14:49
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Unintended Consequences - Yes, to T.M.’s addressing the tax issue. But. “Put the house under my name” implies a gift. Mom is gifting you the house. Along with its basis. Which means, when mom dies, you don’t get a stepped up basis, and potentially have a huge cap gain when you sell.

Funny story. In a nutshell, my sister now owns a house worth $800K with a $4000 basis due to 2 generations of such gifting. She will see that tax bill I’d hope to save you from.

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  • This makes it seem scary. So can one never be gifted within families? Or is there a Tax process to update the basis? – perennial_noob May 14 at 22:49
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    Well. The 'right' way to do it is to die and leave the house to your heirs. There are also ways to use an irrevocable trust to execute the same plan. A bit more expensive, but often used for medicaid planning. – JTP - Apologise to Monica♦ May 14 at 22:54
  • In the US there is some tax advantage to the sale of a primary residence. Of course your sister may not live in the house and moving there for a few years might not be worth the tax savings. – Glen Pierce May 15 at 14:00
  • She does live there, so a $250K exemption, over $500K in cap gains. And since she can't afford the taxes and maintenance, a sale is coming pretty soon. No real improvements were ever made, just repairs/maintenance. And one lawyer after the next, took his money, changed title/ownership and left. To my father in the 80's, then my mother, and then sis. I literally offers the $2K a trust would have cost. But the lawyer told mom 'not necessary'. What did Shakespeare say? – JTP - Apologise to Monica♦ May 15 at 14:19
  • what if my mother "sold" the house to me for $1? – user May 16 at 14:22
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If you don't itemize and wouldn't gain any benefit from itemizing the whole property tax amount, then it doesn't matter how much of the property tax you could deduct since it wouldn't lower your taxes any. I'm assuming that you do, or could itemize.

The relevant instructions (Schedule A) and publications (pub 530) are pretty quiet on who gets to deduct property taxes in an unmarried joint owner situation. The best reference I could find that addresses the question was from 2010. It basically answers in the affirmative that if you could lose the house if all the property taxes aren't paid, then the tax meets the standard of being "imposed on you" stated in pub 530 and you can deduct the entire amount you paid. It gave an exception in Pennsylvania where due to state law the joint owner couldn't lose her 1/6th interest in the house as long as she paid 1/6th of the taxes so her deduction was limited to 1/6th of the taxes.

If you weren't a joint owner and paid the taxes you would not be able to deduct them at all per this question.

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