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Old 06-03-2017, 02:53 PM
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Questions regarding gift of home?

Hello Everyone,

I have questions regarding how best to accommodate the gifting of a primary home. Here is the circumstance:

My Mother in Law has lived in her home for 20+ years. She owns it free & clear. She is moving out and wants to gift the home to my Wife and I. We will be moving in to the home as our primary residence.

I understand and am not concerned with basis and future capitol gains tax.

I am concerned about gift tax.

My first step was to contact our attorney (who happens to run a title company & is a judge). He told me that we could simply quit claim the property and there would be no tax consequences for either party as long as she has not reached the $5 million threshold for gifts.

I questioned this answer as I had consulted Google and read some things that were contrary.

So... I called a CPA. She told me the same thing.

I still have reservations.

Can anyone here point me at a definitive answer?

If I follow their advice and later find error in the advice what could the result be?

Thank you for taking the time to answer my questions.

Steve



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Old 06-03-2017, 06:57 PM
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Quote:
Originally Posted by PNW_Steve View Post
Hello Everyone,

I have questions regarding how best to accommodate the gifting of a primary home. Here is the circumstance:

My Mother in Law has lived in her home for 20+ years. She owns it free & clear. She is moving out and wants to gift the home to my Wife and I. We will be moving in to the home as our primary residence.

I understand and am not concerned with basis and future capitol gains tax.

I am concerned about gift tax.

My first step was to contact our attorney (who happens to run a title company & is a judge). He told me that we could simply quit claim the property and there would be no tax consequences for either party as long as she has not reached the $5 million threshold for gifts.

I questioned this answer as I had consulted Google and read some things that were contrary.

So... I called a CPA. She told me the same thing.

I still have reservations.

Can anyone here point me at a definitive answer?

If I follow their advice and later find error in the advice what could the result be?

Thank you for taking the time to answer my questions.

Steve
he is correct; you as a donees are NOT even subject to any gift tax; sinc e she gives you property valued at more than $14k (in 2016) in any one year, your MIL has to file a gift tax form of 709 . Also, under current law she can gift a total of $5.45 million (in 2016) over her lifetime without incurring a gift tax. If the residence is worth less than this amount, she likely won't have to pay any gift taxes, but she will still has to file a gift tax form of 709 as said above. She may be inclined to sign a quitclaim deed that transfers her ownership interest in the home to you. In most cases, quitclaim deeds are used to transfer property between two individuals within the same family or social circle. In other cases, these instruments may be used to transfer ownership of a home from an individual to a sole proprietorship or corporation. They are almost never used to enforce the terms of a normal home sale.



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Old 06-03-2017, 08:54 PM
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Originally Posted by Wnhough View Post
he is correct; you as a donees are NOT even subject to any gift tax; sinc e she gives you property valued at more than $14k (in 2016) in any one year, your MIL has to file a gift tax form of 709 . Also, under current law she can gift a total of $5.45 million (in 2016) over her lifetime without incurring a gift tax. If the residence is worth less than this amount, she likely won't have to pay any gift taxes, but she will still has to file a gift tax form of 709 as said above. She may be inclined to sign a quitclaim deed that transfers her ownership interest in the home to you. In most cases, quitclaim deeds are used to transfer property between two individuals within the same family or social circle. In other cases, these instruments may be used to transfer ownership of a home from an individual to a sole proprietorship or corporation. They are almost never used to enforce the terms of a normal home sale.
Thank you Wnhough.

To make sure that I understand your reply, you are telling me that if she quit claims the house to us that WE, as donee's, will have NO gift tax liability?

Thank you again for your time.

Steve



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Old 06-03-2017, 09:45 PM
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Quote:
Originally Posted by Wnhough View Post
he is correct; you as a donees are NOT even subject to any gift tax; sinc e she gives you property valued at more than $14k (in 2016) in any one year, your MIL has to file a gift tax form of 709 . Also, under current law she can gift a total of $5.45 million (in 2016) over her lifetime without incurring a gift tax. If the residence is worth less than this amount, she likely won't have to pay any gift taxes, but she will still has to file a gift tax form of 709 as said above. She may be inclined to sign a quitclaim deed that transfers her ownership interest in the home to you. In most cases, quitclaim deeds are used to transfer property between two individuals within the same family or social circle. In other cases, these instruments may be used to transfer ownership of a home from an individual to a sole proprietorship or corporation. They are almost never used to enforce the terms of a normal home sale.
Thank you Wnhough.

To make sure that I understand your reply, you are telling me that if she quit claims the house to us that WE, as donee's, will have NO gift tax liability?

Thank you again for your time.

Steve



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Old 06-04-2017, 12:59 AM
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Quote:
Originally Posted by PNW_Steve View Post
Thank you Wnhough.

To make sure that I understand your reply, you are telling me that if she quit claims the house to us that WE, as donee's, will have NO gift tax liability?

Thank you again for your time.

Steve
as said as donees you are NOT liable for gift tax and your MIL Must file form 609 with the IRS however UNLESS the FMV of th e home is over $4.35M, your MIL does not pay any gift tax but as said she needs to file form 709



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