ok, my mother in law has a property that she lived for 3 years, then rented 2 years so now 5 years later is going to sell it. She is selling for 200,000 wants gift us the money. Can she use the one time gift to us? And since we are receiving..we don't have to pay tax on that..correct?
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There is no "one-time" gift provision. She will have to file a gift tax return. Assuming this is the first taxable gift she's made, she'll use some of her unified credit.
Correct. Gifts are not taxable income. Publication 525. Not that you asked, but if this is a stab at do-it-yourself estate planning or asset purging in contemplation of Medicaid, urge MIL to get professional guidance. These self efforts tend to blow up in people's faces.
-- Phil Marti Clarksburg, MD
Your mother in law will probably pay an income tax on the sale (all of which may or may not be sheltered by the section121 exclusion). The gift will then trigger a gift tax if it is in excess of the annual gifting amount (currently $12K) and if your mother in law has already used up her lifetime gifting amount (currently $1 million). Gary Brolis
Isn't it excludable, providing she sells soon enough?
Seth
"Seth Breidbart" wrote
"then rented 2 years"
Not on the depreciation "allowed or allowable" for the rental period. The remainder of the gains would be tax free if they fall within the allowed exclusion amount.
-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net
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