question about gifting a house - Posted by tom in tx

Real Estate Investing Real Estate Law
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Posted by Wheatie on December 18, 2007 at 21:32:34:

Thanks. Both parties involved were alive when the beneficiary deed was created, and still are. It was done by a RE attorney in the area where the property is located, so I’m pretty sure it the deed itself is legit. I was just wondering about the effect on basis once the property gets transfered based on the deed. Sounds like I need to talk to my accountant.

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question about gifting a house - Posted by tom in tx

Posted by tom in tx on December 07, 2007 at 08:28:29:

My father currently owns about 30 rentals.

he wants to give a couple to me.

1- what is the easiest way to do this?
2- would either of us have to pay taxes on something like this?
3- any other useful info?

thanks
tom

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Re: question about gifting a house - Posted by Rich-CA

Posted by Rich-CA on December 07, 2007 at 18:32:29:

There are a couple of things I have read about regarding gifts.

  1. The IRS limits the amount of gifts and this is deducted from the tax exempt portion of your estate when you pass on. Check with a tax adviser on this as my recollection is a little fuzzy.
  2. Gifts are taxable income to the recipient.
  3. Properties that change ownership as a gift do so at the original purchase price, which means if sold the capital gains is the difference between the selling price and the original purchase price. If the property passes on after death, the “purchase price” is adjusted to fair market value so on sale the amount of tax owed will be a LOT less.
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Re: question about gifting a house - Posted by JOHN HASLACH, CPA, MST

Posted by JOHN HASLACH, CPA, MST on January 02, 2008 at 12:59:46:

Gifts are NOT taxable income to the recipient.

There are likely to be considerable changes to the Estate/Gift tax laws soon, especially if we have a Democratic President elected.

You should work with a qualified professional on this stuff.

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Re: question about gifting a house - Posted by Wheatie

Posted by Wheatie on December 11, 2007 at 15:56:39:

I have a followup to tax implications here. If a property is transfered after death based on a beneficiary deed put into place before death, what are the tax implications?

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Re: question about gifting a house - Posted by Rich-CA

Posted by Rich-CA on January 02, 2008 at 16:26:33:

You neglect to mention the gift limitations and how this affects the estate taxes. You disagree with my CPA as well as Nolo Press on this. Or the information you have provided is not complete.

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Legal issue: Was there Delivery of deed? - Posted by John Merchant

Posted by John Merchant on December 18, 2007 at 14:41:49:

There’s a legal issue here re whether there was a completed delivery of the deed to the beneficiary while he/she was living.

If not, then the deed would be invalid as one cannot deed to a decedent…if so, then it would have been accepted by the person pre-death and would now be part of his estate.

I’ll guarantee there will have been decisions on this issue in many, maybe all, states so the issue will have been discussed in those court decisions.

From those discussions and decisions a lawyer would be able to tell you what the rule is in a particular state depending on the particular facts in your case.

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Re: question about gifting a house - Posted by Rich-CA

Posted by Rich-CA on December 11, 2007 at 18:10:57:

That is beyond my knowledge. The things I know about are those I have worked with/on myself as I am not a CPA. I have not heard of a beneficiary deed before, so I wouldn’t guess.

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Re: question about gifting a house - Posted by JOHN HASLACH, CPA, MST

Posted by JOHN HASLACH, CPA, MST on January 03, 2008 at 07:30:55:

Check out IRS Pub 17, page 89.