Does the gift of real estate property to a family member have to be reported

I gave my son property that was formerly my residence and rental. Is this taxable to either party? Also, does this have to be reported if negative?

Reply to
Jebo
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As a gift there is probably no tax to your son. If the house is worth more than $14,000 ($28,000 if you are married) you should file a gift tax return. But unless your lifetime gifts to other people have exceeded $5 million, it is unlikely that you would actually end up paying any tax.

Do you mean if your equity in the house was less than what you originally paid for it? Yes, it still should be reported on a gift tax return.

Reply to
Stuart A. Bronstein

I just want to add, that for purposes of your son's cost basis after the gift (assuming no gift tax is paid), it will be your cost basis at the time of the gift as long as the FMV was equal to or greater than your cost basis.

If the FMV of the property at the time of the gift is less than your adjusted basis, his basis depends on whether he has a gain or a loss when he disposes of the property. His basis for figuring a gain is the same as your adjusted basis plus or minus any required adjustment to basis while he owned the property. His basis for figuring a loss is its FMV when he received the gift plus or minus any required adjustment to basis while he owned the property.

If he uses your adjusted basis to figure a gain and gets a loss, and he then uses the FMV for figuring a loss and has a gain, he has neither a gain nor loss on the sale or disposition of the property.

Reply to
Alan

which leads to the next piece of advice: consider waiting until your death to give him the house, as it would likely get a stepped up basis upon your death. Others can go into more detail.

Reply to
Pico Rico

"Jebo" wrote in message news: snipped-for-privacy@googlegroups.com... I gave my son property that was formerly my residence and rental. Is this taxable to either party? Also, does this have to be reported if negative? =============Don't forget what your county assessor may do as this is a transfer of ownership....

Reply to
D. Stussy

=============> Don't forget what your county assessor may do as this is a

That's for California, where property tax can generally only be raised when property changes hands. Are there other states where property tax is frozen until change of ownership?

But on OP's specific question, even if it is in California, there is an exemption for transers between parents and children - with the right documentation propety tax won't go up.

Reply to
Stuart A. Bronstein

See page ii of the AARP policy document published in 2003. 42 states have some form of property caps, limits or freezes.

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Reply to
Alan

See page ii of the AARP policy document published in 2003. 42 states have some form of property caps, limits or freezes.

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=========Perhaps so, but for example, in California, it is NOT automatic. The parties have to file documentation to claim exemption from reassessment.

Reply to
D. Stussy

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