Page 18 For Advertising with Results, call The Advocate Newspapers at 617-387-2200 or Info@advocatenews.net LIFE ESTATES AND STEP UP IN COST BASIS O ne common dilemma facing the remaindermen listed on a deed is how tocalculate the cost basis of the real estate in question upon the death of the life tenant or life tenants. This is an important issue as the remaindermen need to know their cost basis in the event they subsequently sell the real estate or rent it out thereby requiring depreciation calculations. If, for example, a father deeded his home to his two children and reserved a life estate on the deed itself (essentially the right to use, occupy and possess the home for the rest of his life), upon the father’s death, under Internal Revenue Code (IRC) Section 2036(a)(1), the fair market value (FMV) of the home at the time of the father’s death would be the starting cost basis in the hands of the children going forward. If the FMV of the home was $600,000, the law treats it as though the children paid $600,000 for the home. This of course helps tremendously to avoid or greatly eliminate any capital gains tax upon a subsequent sale of the home. What if the father and mother both deeded the home to the children with reserved life estates? In this situation, since the father deeded his 50% interest in the home to the children with a reserved life estate, upon the father’s death, only 50% of the property is stepped-up to FMV upon his death. Since the mother deeded her 50% interest in the home to the children with a reserved life estate, upon the mother’s death, only 50% of the property is stepped-up to FMV upon her death. As a result, the home would have to be valued at both the father and mother’s death in order to obtain the new cost basis in the hands of the children upon the second to die. You would take 50% of the FMV of the home upon the father’s death and add that figure to 50% of the FMV of the home upon the mother’s death. Furthermore, 50% of the FMV of the home would be includible in the taxable estate of each spouse upon his or her death. What if the father and mother reserved a life estate, as husband and wife, tenants by the entirety? Would that make a difference in the calculation? The answer is no. Upon the father’s death, he in essence gifts his life estate to his wife. This is referred to as a life estate pur autre vie. Upon the subsequent death of his wife, there will not be a step-up in cost basis of the husband’s 50% life estate given to her as she simply did not retain a life estate in 100% of the home. She only retained a life estate in the 50% that she originally gifted to the children. She did not retain a life estate in the husband’s 50% interest. Only he did. This is pursuant to IRC Section 2036(a)(1) dealing with retained interests. Joseph D. Cataldo is an estate planning/elder law attorney, Certified Public Accountant, Certified Financial Planner, AICPA Personal Financial Specialist and holds a master’s degree in taxation. THE MALDEN ADVOCATE–Friday, June 30, 2023 MUSINGS | FROM PAGE 15 James Montgomery Blues Band with Peter Myles’ Asylum opening. Jenkins Auditorium at MHS (all I remember about the night is Schlitz in cans, lots of weed, and finishing the night at Signor Pizza in Malden Square (think the movie “Dazed and Confused”). 2. Last concert: (2022) Aerosmith/Extreme, Fenway Park (Malden boy makes good). 3. Worst concert: (1978) Ted Nugent, Boston Garden (dreadful – we were back in Malden before “Cat Scratch Fever”). 4. Loudest concert: (1994) Social Distortion at Metro on Lansdowne Street (name dropping alert): Standing onstage with Social D’s manager Jim Guerinot right behind the drum kit reduced my hearing ability for years. 5. Best Concert: (so many) Ramones/Stompers, Club Casino 1981 (?) Sal Baglio & Joey Ramone (?). Forgetaboutit! A night that will go down in infamy. Insert a great big smiley face. 6. Seen the most: Extreme. From Gary’s first band Adrenaline in July of 1979 at the Pegasus Club in Ipswich to Fenway Park in 2022 (and many, many stops in between). 7. Most surprising: Allman Brothers Band (surprised because they sounded so good live). 8. Happy I got to see: (1993) The Cure, Great Woods (they commanded the stage from the moment they hit it until the wee small hours). 9. Wish I could have seen: Ray Charles, Jerry Lee Lewis, Miles Davis, Merle Haggard, John Prine, The Jam, George Harrison, Elvis, The Clash, Tiny Tim, Frank. 10. Still need to see: Elvis Costello, Paul Weller, Roxy Music, Engelbert. As Peter Falk’s iconic TV character Columbo’ would say, “Just one more thing, sir” – Malden slice of life brought to you by longtime (where else) Edgeworth resident Jimmy “Moe” Molinari: “I posted a Ma story and my lifelong friend Johnny Flanagan said, ‘Eleanor always told me to eat and then she fed me!’ That reminded me of a time me, Chris Parker, ‘Bubba’ Hatch and Michael Hagerty raced a car and hit a curb blowing out a tire. So, we got another tire and in my yard under lights 2 in the morning are replacing the rim. My mom wakes up and says, ‘Jimmy what are you doing?’ I reply, ‘Bubba got a flat, we’re fixing it.’ Ma says, ‘oh okay, you boys hungry I’ll heat up macaroni.’ Got me laughing out loud! Just like the Goodfellas scene! Three in the morning in my kitchen me, Park, Bub, Hags just broke about five laws and we’re joking and laughing eating macaroni and meatballs with Ma! Dad was away somewhere with his friends, if not, we’d be behind Spady’s under streetlights changing it because dad just knew we were ‘up to no good,’ as he would say. Ma? She had an entirely different mindset. Food was the answer to 90 percent of any of life’s problems!” Classic Moe, thanks for sharing, Jimmy. Like us on Facebook advocate newspaper Facebook.com/Advocate.news.ma ~ Legal Notice ~ NOTICE OF FUNDING AVAILABILITY (NOFA) American Rescue Plan Act Funds Available for Vacant Property Acquisition and Development The City of Malden has received $45.7 million in American Rescue Plan Act (ARPA) Local Fiscal Recovery funds and has granted $2 million to the Malden Redevelopment Authority (MRA) to acquire, rehabilitate, and sell vacant and blighted properties as affordable homes to income-eligible households. The City of Malden is seeking proposals from non-profit housing developers, for-profit housing developers, and public housing authorities to develop affordable homeownership under the Neighborhood Hub Program. Eligible projects for ARPA funding include the acquisition, rehabilitation, or new construction of affordable homeownership. The City’s Office of Strategic Planning and Community Development (OSPCD) will review applications for accuracy and completion. OSPCD staff may request additional information after an application has been received. The full Notice of Funding Availability will be available at https://www.cityofmalden. org/bids.aspx beginning on Wednesday, June 28th, 2023. Applications are available upon request and will be accepted on a rolling basis. Please direct any questions to Kristina Tseng, HOME Director, at ktseng@cityofmalden.org June 30, July 7, 14, 21, 2023 REAL ESTATE TRANSACTIONS BUYER1 CAO, YIN LAM, WAI K BUYER2 XIE, YAN X SELLER1 690-692 MAIN STREET LLC SOMVERVILLE CITY CLUB INC SELLER2 Copyrighted material previously published in Banker & Tradesman/The Commercial Record, a weekly trade newspaper. It is reprinted with permission from the publisher, The Warren Group. For a searchable database of real estate transactions and property information visit: www.thewarrengroup.com. ADDRESS 690-692 MAIN ST 119-R OAKLAND ST CITY MALDEN MALDEN DATE 06.08.23 06.06.23 PRICE 1668000 1200000
19 Publizr Home