[WSBARP] QCD and REET question-another one

[Athena Dickerson]

Hi list serve mates:

Wondering if anyone has any suggestions on how best to structure the following to avoid/minimize REET and other implications

Long story short, my clients saved their sister-in-law's house from foreclosure about 10 years back.   Because of where the bank was in the process, etc they couldn't just cosign or loan her money, so they bought the property with a PSA, have a modest mortgage on the property, and have let SIL live there for the last 10 years.    So, my client and her husband are the only ones on title and the mortgage is in their name only.  For the last 10 years, that my clients have owned the property SIL has been paying what she can, sometimes it's enough to cover the mortgage, sometimes not.  Now SIL is back on her feet and my clients want to facilitate getting the property back in her name.   The lender wants to quit claim SIL back on (which would put my married clients and SIL on title) and then after that (transaction 1) refi the property (with only SIL, removing my clients from the mortgage) and simultaneously quit claim my client and her husband off (escrow will handle this last part, Transaction 2).   In other cases, I have used the clearing title exception to REET but in this case that doesn't fit the facts.  I am trying to avoid excise tax as much as I can or getting audited.   The property has appreciated by quite a bit FYI.

Trying to decide how to structure the first transaction that makes the most sense- the QCD adding SIL on and accompanying REETA.  It seems each exemption I want to use, at least in part, doesn't quite fit right.    Thoughts?  I know at some point there will likely be some tax implications but wondering how to best structure this, at least the first part.


Athena Makratzakis Dickerson
DETHLEFS SPARWASSER<https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fdetsparlaw.com&c=E,1,3MignbV7JN3fDW35Ex6-X8EUG7nEGjNuKTlfq-Aje1rdb6fDs8Yt68iJDkX__xogulPxvRxqczE1jab42wQRIayCHjlfyP0fLjpZdlZRIPinoeG9OpKmAQ,,&typo=1>
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Athena Makratzakis Dickerson
DETHLEFS SPARWASSER<https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fdetsparlaw.com&c=E,1,3MignbV7JN3fDW35Ex6-X8EUG7nEGjNuKTlfq-Aje1rdb6fDs8Yt68iJDkX__xogulPxvRxqczE1jab42wQRIayCHjlfyP0fLjpZdlZRIPinoeG9OpKmAQ,,&typo=1>
REICH DICKERSON PLLC<https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fdetsparlaw.com&c=E,1,bLSaO3IzGA_4xpDLui54w20Gh4qqnIdqihOO9lsFaFpEr3IyQlnxxNFTiURyp45gMfqeZoZNVArN8uCnWCEWoTGD7jQGcUGBlkqV6h6b1rlgrg,,&typo=1>
100 Second Avenue South, Suite 190  I  Edmonds, WA 98020
P  425.776.1352  I  F 425.776.2467
athena at detsparlaw.com<mailto:athena at detsparlaw.com>

This message and the documents attached to it, if any, contains confidential information from DETHLEFS SPARWASSER REICH DICKERSON PLLC, is intended only for the use of the addressee and may contain information that is privileged and confidential under applicable law, and/or may contain attorney work product. If you are not the intended recipient, you are hereby notified that any dissemination of this communication is strictly prohibited.  If you have received this communication in error, please delete all electronic copies of this message and its attachments, destroy any hard copies you may have created and notify our office immediately.

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