My Idea To Pay Less Tax... - Posted by Ray

Posted by Nate(DC) on June 17, 2001 at 21:51:21:

If you give him the property you may owe gift tax on the amount. See the discussion below on gift tax.

NHT

My Idea To Pay Less Tax… - Posted by Ray

Posted by Ray on June 17, 2001 at 15:43:51:

I have a house I?m getting ready to fix and sell which I bought about 5 months ago, there?s going to be about $40,000 profit.

What I?d like to do is have my son take part of the profit in his name since his tax bracket is lower (like NO income other than this). I?m thinking like $20,000, this will get him through his first year of college.

So, when I find a retail buyer, I?ll deed to my son then my son deeds to the buyer. I?ll either do a double close or deed to him shortly before his closing with the retail buyer.

Any of you experts see any problems with this, tax or otherwise. Or maybe you have a better idea.

Thanks in advance,
Ray.

Re: My Idea To Pay Less Tax… - Posted by SueC

Posted by SueC on June 18, 2001 at 06:06:33:

If the property is worth more than $10K, he’ll pay gift tax if you deed it to him. In addition you’ll pay transfer tax if any in your state.

You’d be better off I think, and check this with your lawyer or CPA, transferring the property into a family limited partnership or LLC, of which your son owns a percentage, which percentage value is $10K or less. Then, you transfer $10K value each year to your son (gift) tax free, until the entire amt is transferred to his name. You can sell the property at any time, it won’t matter because it’s the value of the entity that matters. There are other issues such as business purpose, and if you’re using an LLC how you “check the box” for tax purposes, but this is something you should have a lawyer and/or talented CPA set up for you, and not try to do-it-yourself.