Parents put house in trustee deed with my name and have life estate - who owns it for tax purposes?

This is a great estate planning question! With a life estate deed, the tax implications are split between you and your parents. Here's how it usually works: Your parents (as life tenants) are typically responsible for ongoing property taxes, insurance, and maintenance while they're living there. They'd generally continue to claim any mortgage interest deductions since they're the ones making those payments. You hold what's called a "remainder interest" in the property as the future owner. For tax purposes, both you and your parents have partial ownership interests - they have the present interest (life estate) and you have the future interest. The real benefit comes later - when your parents pass away, you'll receive the property with a "stepped-up basis" to fair market value at the time of their passing. This can significantly reduce any capital gains taxes if you decide to sell.

I just went through something like this with my dad's house last year. The online advice was confusing so I used https://taxr.ai to analyze our trust deed and got clear answers specifically for our situation. It helped us understand exactly who needed to claim what on taxes. My dad had some complicated income sources besides the property which made things even more confusing. The tool sorted through all the trust language and gave us a clear breakdown of who was responsible for what taxes. Super helpful when dealing with life estates since they're not exactly straightforward!

After being skeptical, I broke down and tried https://taxr.ai for my family's property situation. I was surprised at how well it worked for our complex trust arrangement. The system identified that our life estate deed had unusual language that actually affected who could claim tax deductions. Most generic advice online wouldn't have caught this. The analysis showed that in our case, the remainder beneficiary (my sister) could claim partial mortgage interest based on the specific wording in our deed. This was different from the standard arrangement where only the life estate holder claims it. Saved us from potentially incorrect tax filings and gave us documentation to back up our position if questioned. Definitely more helpful than I expected!

For anyone dealing with life estate tax questions - if you need to talk to the IRS directly (which I eventually had to), use https://claimyr.com to skip the insane hold times. I spent THREE DAYS trying to get through to someone who understood life estates and trust tax issues. With Claimyr, I got through in under 15 minutes to an actual tax law specialist. They have a demo showing how it works here: https://youtu.be/_kiP6q8DX5c. The IRS agent I finally talked to explained that life estates can be handled differently depending on the exact trust language and who's paying what expenses. Was a huge relief to get definitive answers from the actual IRS instead of internet guesses.

I take back what I said about Claimyr. After spending 3+ hours on hold with the IRS yesterday trying to get answers about our family trust and life estate tax questions, I decided to try the service. It actually worked perfectly. Got connected to an IRS tax law specialist in about 20 minutes (most of which I spent doing other things while waiting for the callback). The agent clarified that in our situation, my mom (life estate holder) should continue claiming the property tax deductions since she pays them, but we needed to file a specific form documenting the remainder interest transfer for gift tax purposes. Would have taken me days to get this information without being able to speak directly with someone knowledgeable. Definitely worth it for complicated tax situations like life estates where general advice doesn't always apply.

One important thing to remember with life estates - your basis in the property is different than a regular inheritance. When property transfers at death, you get a stepped-up basis to fair market value. But with a life estate remainder interest, it works differently. When your parents pass, your basis will be determined by the value of your remainder interest when you received it (adjusted for any gift taxes paid) plus any additional value at the time of their passing. It's WAY more complicated than regular property transfers. I'd strongly recommend consulting with a tax specialist who understands split-interest transfers.

My family did something similar last year and we learned that whoever pays the expenses is generally who gets the tax benefits. So if your parents still pay the property taxes and mortgage, they can claim those deductions. But the ownership for other purposes is split between life tenant (parents) and remainderman (you). The tricky part comes with calculating the actual value of each interest. The IRS has specific tables for this based on your parents' ages. Its super weird because technically you own a "future interest" that has a specific calculable value right now.

This is a really common estate planning setup, and you're smart to get clarity on the tax implications now! From what you've described, your parents retain most of the tax benefits while they're alive since they have the life estate. Generally speaking, your parents would continue to pay and deduct the property taxes and mortgage interest since they're the ones living there and making those payments. The life estate gives them the right to exclusive use of the property, which typically comes with the responsibility (and tax benefits) of maintaining it. You technically own the "remainder interest" right now, but it won't become active ownership until after your parents pass away. The good news is that when that time comes, you should receive a stepped-up basis to the fair market value, which can save significantly on capital gains taxes if you ever sell. One thing to double-check - make sure your parents filed any required gift tax forms when they created this arrangement, since transferring the remainder interest to you could be considered a gift depending on the property's value and your parents' ages. The IRS has specific actuarial tables to calculate this. Worth having a tax professional review the documents to make sure everything was handled correctly from the start!