I can't imagine that there is anything you mom could or should do to beat the standard deduction. I certainly wouldn't tie myself into knots trying. Having no mortgage, I haven't done a schedule A in years. I think this is something to be happy about. It means I am not making payments on anything, don't have catastrophic illnesses, don't have horrendous real estate taxes, haven't been robbed of a significant amount of property and am moderate in my charitable giving.

You certainly can't both claim the real estate tax or interest on the same property unless you divided it in some way, but I think that would work against your best interests.

Mom doesn't have to pay "rent" in order to make you a gift of up to 10k a year. I believe she could give another 10k to your husband and if you are in a community property state, I think the community can receive 10k as well. Hopefully an attorney or tax expert will weigh in here.

Actually, the permissable gift amount is now $11K to as many people as she wishes. It's perfectly legal.

Britta, here's a couple thoughts on somethings you mentioned.

What is your Mom's financial status? Is she's just living comfortably and getting by or does she have lots of investments and savings? If she's just comfortable and getting by then she will probably just use a standard deduction and not itemize. If she has lots of investments and savings then together you should be looking into estate planning.

If your going to see your accountant to ask about this he is going to need know your Mom's complete financial situation to make any suggestions. Which of you would benefit more by claiming the real estate tax (probably you and DH)? Will your Mom's portion of the land be divided among all her beneficiaries (depends how will and title to land is written)? Will there be inheritance tax due on the land if owned jointly with your Mom? What happens financially if your Mom goes into a nursing home? You can talk to your accountant but an estate planner may be a better choice.

This would also be the time for your Mom to make decisions on her healthcare including POA's for medical and financial decisions. If she moves in with you are you willing to be responsible for taking care of her both physically and financially?

This is a good time to discuss all these items with your Mom so you know exactly what she wants.

Like to learn...

My mom is doing well thanks to my dad's preplanning for their retirement. They have several investments set up and she receives a nice monthly check from his retirement package. They got hit hard when the stuff after 9/11 happened, and haven't recovered from the status they had before, but I believe the financial advisor they use put them in low-risk investments due to their age.

Before my dad died, they did an estate planning package with an Estate planner, and not much has changed about it. At that time they did a living will, and have designated myself as POA in the event she becomes incapacitated. The plan we're currently looking at for the addition of the MIL suite includes an area that could possibly be converted into a lift for ease of access for her, should she need it. (She's 52, so God willing, this isn't something we would need to put in for many MANY years!) My hubby and I are both in the medical field (well, I'm a stay at home mom of 3, but was a medical tech before marriage), so we are fortunate we can help in that area more than some non-medical families could. But, we are also aware that more intense care than what we can provide at home may be in our future.

Thank you for pointing out all of the legal mumbo-jumbo for me to research and ask about in more depth. I think the co-owning land is not going to happen now anyway because she has since talked to her accountant and they pointed out several factors of that... it would be more hassel than a benefit. At the time, I was just trying to research all options.

This forum is soooo helpful, and I appreciate the time people put in here voluntarily to help answer some questions and point out things that should be looked into further. Thank you to all who are trying to help us figure this whole thing out!

As someone who takes care of her 78 yr. old mother, let me assure you TODAY is the time to put together a thoughtful, cohesive estate plan! Trust me, nothing is harder than trying to get one in place following a major "failure" on the part of a surviving parent. And now that Social Security is about to go belly up, the "rules" surrounding estate planning and gifting change yearly. MOVE NOW!

Your mother is legally entitled to gift up to 11k/yr. to any and everyone she so pleases! Once she gifts the money, it's no longer her's... it's a GIFT. But if you are willing to abide by promises you still have the money at your discretion to fund her long term care should it become necessary. A big "but"... !

I see no problem with your mother borrowing money to fund a MIL apartment. BUT, the reality is, whatever she funds will be your's at such time as she either dies or requires care in a facility. That's not such a bad idea... it locks her assets away... safe from the requirements of "long term care". DO NOT PERMIT HER NAME TO APPEAR ON THE DEED TO YOUR HOME! If it appears there the government will swoop in and attach that portion of your home when her assets run out and her long term care requires funding. Don't even go there.

So much of this has to do with your mother's frame of mind. My late FIL was bound and determined to die "broke". And he did! when his stepchildren contested his will there were NO assets left... they'd all be "gifted away"! His kids understood and were willing to fund his life with his savings... we had a FIL apartment ready for him. He died of a heart attack before requiring it.

Do you have siblings? are you "all on the same page" with respect to your mother? This is key. My husband and BIL were OK with the agreement, my brother and I are OK with Mum and how we're handling things. But, Man! do we ever wish we'd insisted our names were on the deed to Mum's home years ago when the opportunity presented itself...

See a lawyer and get it done, NOW. You'll be glad you did... playing "catch up" is not much fun. Trust me, I know.

Chelone, could you document in some way that idea that you can give up to 11k to anyone and everyone you choose without incurring a gift tax? I was a probate paralegal, and I admit that was many years ago, but I guess I am somewhat surprised that recipients are no longer broken down by class depending on degree of kinship. But things change and it may be that I have simply fallen behind the times. I certainly understand that the 10k limit has been raised to 11.

My nephew in law is an estate planner. He arranged for us to buy our mom's home and then lease it back to her at $5,000 a year. We bought it at the going rate and when it is sold there will be very little profit made on it, so no high taxes. No money changed hands, he also told her she could give $10,000 (at that time) to each daughter and some to our husbands every year. Everything was taken care of years ago, including her funeral bill. All she has now is her furniture. She is 92 and has been pretty healthy until she took some bad meds, they nearly killed her.

Let Momma move in, do whatever she wants to your house, but make her buy the land that you will inherit! No write-offs on the land just makes it better for you. Your basis will be whatever it's worth when she dies. NO Joint Tenancy with anyone!!! Let her pay the 'going rate'.. your basis will be whatever it is when she dies. Joint Tenancy will confuse things and make you pay more in taxes.