More details to this question:
If parents "gifted" a house to one child (left the other completely outnever mentioned other child in will when leaving contents of house to the child they gifted house to) do they have to pay a gift tax on this gift?
2 ANSWERS
Bruce Givner
You should consult with your CPA. Any transfer of property during lifetime should be reported on an IRS Form 709 (Federal Gift Tax Return). Even if the value of the property is less than the annual gift tax exclusion ($13,000 per donor), a gift tax return should be filed. Why? Because filing the return, disclosing the transfer (in a manner designed to comply with the Section 6501 regulations) causes the 3 year statute of limitations to run. Therefore, the IRS cannot - in the future - claim that the gift's value was larger. If you fail to report a gift, and the IRS later claims the value was larger, then the IRS can always assert a gift tax was due - at any time, no matter how many years in the future. If the transfer was by Will, then that is not a gift. That is a transfer that may need to be reported in an IRS Form 706 (Federal Estate Tax Return). Whether or not a 706 is needed depends upon the value of the estate. If it is this year, the estate would have to be near $5,000,000 in value. Again, you should talk to your CPA.
Answered on Apr 19th, 2011 at 10:37 AM
Trusts and Estates Attorney serving Jacksonville, FL
Partner at
Law Office of David M. Goldman PLLC
3 Awards
Gift taxes are paid by the person making the gift, not receiving it. Unfortunately if the home was given to you while your parents were alive, your cost will be $0 so when you sell it you will pay much more in taxes than if you had received it upon death.
Answered on Apr 18th, 2011 at 11:39 AM