Q: My husband inherited his father’s house with the stipulation that his current wife would have a life estate.

When she decided to move from the area, we settled with her to sign over the deed for $25,000.

When we sold the property, the accountant used the numbers listed for the property value when my father-in-law passed away instead of the value of when my stepmother-in-law signed over the deed.

Is this correct? My feeling is that we did not become the actual owner of the property until the deed was changed and therefore should only be charged capital gains on the value as of that date. Thank you for your time.

A: While it seems as though you didn’t own the property because you didn’t have complete control over it until you paid off your stepmother-in-law, your husband was in fact the owner of the property once your father-in-law died.

Here’s how life estates work: The property passes to the “remainderman” (your husband) once the owner dies. That’s when ownership is considered to transfer. The person who benefits from the “life estate” (your stepmother-in-law) typically pays the taxes, insurance and mortgage on the property. Once she dies (or signs away her rights to the life estate), the remainderman has complete control over the property.

While she has some control over the property during her lifetime, your stepmother-in-law would not be able to sell the property or transfer ownership because your husband was the true owner — and that ownership interest had some value at the time your father-in-law passed.

While he owned it already, the $25,000 he paid your stepmother-in-law bought your husband the right to currently use the home. The accountant would have taken into account the value of the home at the time your husband inherited the home and may have included the $25,000 as an amount paid to obtain full rights to the home.

Please talk to your accountant again for more details.