A gift tax is a tax levied by the federal government, and in some cases states, on assets transferred from one person to another. The tax requirements could vary greatly in different situations, so it is always wise to consult with a real estate or tax attorney. Look here for some information on gift taxes and what you need to know.
With estate planning you can either leave a property to heirs through a will thus creating an inheritance, or gradually give your family members shares of the property through gifts. From a tax perspective, giving property as an inheritance is better. Another factor to consider when bequesting property is how many and which family members may be interested in the property.
It is probably better to transfer property through inheritance, rather than gifting or quit claiming the property. With inheritance, the property will be transferred at the market value of the day of the land, and both parties will avoid a big tax bill.
Should a person give a family member property or let the person inherit it? Ilyce tells the reader that inheriting property is better than receiving it as a gift because of the taxes involved. Putting the property in trust and bequeathing it to a family member upon the person's death helps the receiver avoid gift taxes.
Land can be given as a gift through the use of a quit claim deed. No taxes need to be paid if the gift is valued at less than $12,000. You might need an appraisal to prove the value of the land to the IRS.
Giving the gift of property may cost the recipient a lot of cash in taxes. There are other options for a person than giving away the property, so as not to cost the recipient much money in gift taxes. The person could give a portion of the property or the person can purchase the land and the giver can return the cost of the land to you each year. The best way to make sure the recipient of a gift of property is to sit down with an estate attorney and go over all your options.
Receiving a life estate in a home means the home belongs to you and you can do as you wish with the property, except for sell or transfer upon death of the holder. Giving someone a life estate could result in a gift tax. Talking with a real estate attorney should help determine a way to use a life estate without incurring a gift tax.
If you are going to give someone the gift of property, there are ways to minimize or avoid the gift tax. You can give the property and pay the gift taxes for the person. You can also give the property in increments of $12,000, the maximum amount anyone can give without having to pay the IRS' gift tax. There are several options to give property as a gift without having to pay gift taxes on it.
Adding an additional person to your title but not the mortgage is usually not a good idea. Essentially you are giving that person half the value of your home, but none of the responsibility or liability.