Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

October 9, 2012
Should I sell Grandma's vacant house now or after her death?

Q: I have power of attorney for my 96-year-old great grandma who is suffering from dementia and is no longer able to live in her home. She has a vacant home in Bakersfield. I am wondering if I should leave the home vacant until she passes or would there be benefits to selling it while she is still alive? -- Linda, Fair Oaks, CA

A: There are two types of durable powers of attorney - one that is effective immediately, and one that is effective only upon a person's incapacity (sometimes called a "springing" durable power of attorney). If your great-grandmother's power of attorney is the springing type, you need proof of her incapacity (usually a doctor's certification but check the document) before you can act using her power of attorney.

If the power of attorney is effective now, there are a number of issues to consider regarding whether to sell the house. First, if she is receiving certain types of state or federal benefits, the proceeds from the sale of the house could affect her continued eligibility for these benefits.

Also, depending on the house's value and her cost basis in the house, there could also be adverse tax consequences to selling the house now. If the house would sell for more than the cost basis, there could be capital gain tax to pay. She may qualify for the $250,000 exemption from capital gain tax on the sale of a principal residence, but if the gain is more than $250,000 there would be capital gain tax on the amount over that.

On the other hand, there are costs associated with keeping the house to consider as well - upkeep, property taxes, repairs, etc.

I would recommend consulting with your great-grandmother's estate planning attorney and/or accountant if you have questions about whether to keep the house. The answer depends on your great-grandmother's specific situation, and an experienced attorney or accountant can help you analyze the benefits and drawbacks of the sale in her case.

Finally, if the house is held in a trust, you may be not able to sell it using the durable power of attorney. The trustee manages the assets inside the trust, so the trustee would be the person who would handle issues related to the house.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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