 There might be a probate tax in Pennsylvania, but it will pale in comparison to this stupid move and what it will do to your capital gains. Because if he gives you his house, his basis becomes your basis, and when you all sell it someday, you're going to pay tax on everything above what he paid for the house originally. Dumb. If, however, you receive the house upon his death, you get stepped-up basis, meaning that your basis in the house for tax purposes is the market value at the time of his death.