Posted by Frank Chin on January 19, 2006 at 16:43:39:
Maria:
See the link:
http://www.povertylaw.org/legalresearch/hotline/faqs/rhodeisland/faqclntri/C66RI.html
We’ve had estate planning done by “estate” professionals, we planned around gift taxes, and the impact of inheritance taxes. None mentioned anything about “gift tax free”, other than the $11,000/year one person can gift another, tax free. Is this the statue you’re referring too??
Frank Chin
Mom adding siblings to deed gift tax? - Posted by JoAnn Lane Stickley
Posted by JoAnn Lane Stickley on January 15, 2006 at 16:23:36:
In California, my mother wants to add my brother and myself to her house deed. Would we be liable for gift tax on this transaction? I don’t want her to do this if it is going to cost me. The house is worth $500,00.
Thanks
JoAnn
CESO15@msn.com
Re: Mom adding siblings to deed gift tax? - Posted by Maria Concepcion
Posted by Maria Concepcion on January 18, 2006 at 11:57:00:
JoAnn if your mom wants to add you on the deed of the property.She can do it at no cost to you or your mom.You might pay to get the contract noritized,recorded all for under $50.00. And no gift tax or capitol gain needs to be paid… I do know the statue…
Maria
What a mistake, don’t do it… - Posted by David Krulac
Posted by David Krulac on January 16, 2006 at 22:36:47:
when you inherit a property versus getting before death as a gift, you gain the “stepped up basis”. This menas that you establish a new basis as the FMV as of the date of death. This is probably the best feature of the Federal tax law and can be unlimitedly used. If you inherit a million dollar property that your parent paid $100,000 for, then your new basis is a million and you just got $900,000 capital gains tax free. Or if the same property was gifted to you before death you would owe $135,000 Federal capital gains tax, if you sold immediately. Since I just saved you $135,000 you can send me a 10% finder’s fee. Thanks.
Re: Mom adding siblings to deed gift tax? - Posted by Frank Chin
Posted by Frank Chin on January 16, 2006 at 17:52:31:
JoAnn:
Get some competent tax advice from a CPA conversant with “estate issues”, which is closely tied in with gifting.
The person GIVING the gift is liable for the gift tax, not the person receiving it. And the gift is dependent on the equity of the property.
And before she does anything get an appraisal.
So, for instance, if the property is appraised at 500K, and 500K is owed on a mortgage, then the gift is worth zero. If its owned free and clear, then, if each of your owns a third, then the gift is worth one third of 500K.
One person can gift another 11K a year gift tax free. But they can give larger amounts gift tax free but reducing what you can inherit on a tax free basis. Or she can give you each a note, with interest regulated by law, and reducing (gifting) the amount due by 11K each year.
And if this is the only thing she owns, it makes sense to gift it all at once. More complcated if she has other assets.
Frank Chin
Re: Mom adding siblings to deed gift tax? - Posted by John
Posted by John on January 15, 2006 at 17:44:24:
Seek advise of tax professional.
The way I understand this, is you get the cost basis of the property as to when your mom bought it. You will pay capital gains tax using her cost basis. If you inherit the property you recieve the current value as of the date of death and if you sell then there are no capital gains tax.
As far as gift tax I know you can give 11K per year tax free up to a certian limit of which I am unsure. Above thatyou or your Mom would pay gift tax. However the value of the gift would 1/3 of her cost basis in the property not the current appraised value.
I would still consult a CPA and an estate planner attorney.