Q: My 92-year old grandmother transferred a deed of 6 acres of raw land to me at the beginning of March. I’m not sure what the property is worth.
What would be the best way to determine its worth? And since I don’t know its worth, I am concerned about possible gift taxes my grandmother would have to pay if the land is worth more than $12,000 in value. What do you recommend I do?
A: I’m not sure why your grandmother didn’t just will the land to you rather than giving it to you now. If you inherited it, you would receive the land at its actual market value on the day she died. It’s a much smarter move than giving you the land.
Has your grandmother actually filed the quit claim deed with the recorder’s office? If she has not filed the paperwork, it’s possible that the gift hasn’t really been given. If not, perhaps you and she could talk about her about keeping the land for the moment, and she can then leave the land to you in her will.
Another possibility would be for her to set up a trust, put the land into the trust, and name you the beneficiary. When she dies, you would automatically receive the land without having to go through probate. The cost of the trust would be around $1,000, which you might want to pay.
Assuming that the land transfer is a done deal, you won’t have to pay taxes on the gift. As you have correctly noted, if the land is worth more than $12,000 (which is the amount that anyone can give to any individual tax-free this year), she may have to file a gift letter with the IRS, and the full amount of the gift over $12,000 would be deducted from her $1 million lifetime exemption. But depending on where you live, you might want to talk to an accountant to make sure there aren’t any other local or state tax consequences to the transfer of title from your grandmother to you.
To find out how much the land is worth, please talk to local real estate agents who can help you figure it out based on what else has sold in the area recently. Or, you can hire an appraiser.
Published: Mar 27, 2007