gift tax
Ilyce Glink on WSB Radio — August 23, 2009
Today on the Ilyce Glink Show, Ilyce took lots of questions from callers, and discussed gift taxes and annual limits on giving without incurring a tax and how to transfer a 401k to a new employer’s account, and how to deal with lost interest from the 401k transfer. She also took more questions about the Making Home Affordable Plan and loan modifications, including whether or not you should hire an attorney to help with a loan modification.
Estate Planning To Avoid The Gift Tax Dilemma
Estate planning is the way a person should go when thinking about transferring a piece of property from a parent to a child. If the transfer is not done properly, a gift tax may result being billed by the IRS to the parent. When in doubt, it’s better to obtain good advice, do some estate planning and get it right the first time.
Helping Daughter Purchase Home
Homeowners can sell their property for the amount they wish, but if it is sold for much less than it is worth, it will need to be determined if that difference is a loan or a gift. Giving cash or a home itself as a gift can trigger taxes from the IRS. Lending, rather than gifting, the cash to buy a home should be worked out with a real estate attorney.
Buy Home Or Receive As Gift: Tax Implications
What is the best way to give your home to another family member without incurring a large tax? Ilyce warns against transferring a house into another family’s name because of gift tax implications. Instead the family member could buy the home from you, while you become the lender, loaning 100% of the money. This way you can avoid the gift tax, and pay a mortgage payment every month instead of rent.
Avoid Capital Gains Or Gift Tax On Real Estate Investment
What’s the best way to pass a second home on to heirs? If you don’t want to pay capital gains tax on a sale or a gift tax you should give your heirs an ownership share of the home gradually. If you give an amount of the real estate investment equal to the amount that’s not subject to gift tax you can avoid gift tax. Right now you can give people up to $13,000 a year tax-free. That protects everyone from paying capital gains tax or gift tax on this real estate investment.
Capital Gains Tax Or Inheritance Tax On Home Transfer
It’s important to consider the tax implications of giving your home to your children. If you give your children your home while you’re alive, they’ll receive the home at the cost basis for which you bought the home originally. If you wait to give the home to your children upon your death they’ll receive the home at the cost basis it had on the day you died. The cost basis affects how much capital gains tax your children will pay on the home. It may be easier to pay inheritance taxes than capital gains tax and an estate of greater value can be excluded from inheritance or estate taxes.
Early Estate Planning May Protect Home From Medicaid
Many older people worry about their home being sold to pay for nursing care or Medicaid. To protect a home from being subject to the Medicaid lookback period, a family should do estate planning ahead of time and perhaps set up a life estate. A life estate will allow an elderly parent to live in a home prior to passing it on to his or her family and protect the home from being sold to pay for elder care costs.
Tax Treatment of Inherited IRA Depends on Distribution
When you inherit an IRA, what taxes do you have to pay on it? The income tax you pay on an inherited IRA depends on how you receive the money. If you receive the money immediately upon the IRA owner’s death then you’ll be taxed at your regular income tax rate. If you roll the IRA money into an inherited IRA you have up to five years to withdraw the money and pay taxes at a marginal tax rate. For more information contact an estate attorney or a tax preparer.
Use Living Trust Instead of Title Change For Inheritance
When you want to bequest property to someone it may be better to use a living trust instead of changing your home’s title outright. If the person who you want to inherit your property is having marital strife, changing the title may cause the property to be considered part of the marital estate. In addition, if your heir lives outside of the U.S. that’s another factor to consider in the decision about whether to use a living trust or change the title to the house.
Quit Claim Deed Affects Cost Basis
How do you calculate cost basis on a home you receive through a quit claim deed? The type of home ownership is also a factor – for example joint tenancy. Learn how to do the calculation for cost basis and learn the rationale used to determine cost basis when families transfer home ownership using a quit claim deed.
