Skip to main content

IRS Targets inter-family real estate transfers - Gift Tax issue

Whenever you give someone more than the annual (yearly) exemption amount, you are supposed to file a gift-tax return. There is a tax on the givers of gifts. Or course, there is a lifetime exemption of $5 million so until you give more than that, you won't owe any tax (it used to be $1 million and could revert back to that if Congress lets it happen in 2013). But, you still have to file a return if you give someone more than $13,000 in any one year.

Most people don't make large gifts, so they don't have to worry about gift-tax returns. But many people do give away their home or land (or add their child's name to the deed as a co-owner). If you put your home in joint ownership with your child, you effectively gave that child half of the value of your home. Unless your home is pretty small it's probably worth more than $26,000, so you should file a gift-tax return.

Now, the IRS is cracking down on this issue. They have targeted several states and demanded that the states turn over real estate transfer records so they can see if people are giving away homes without filing gift-tax returns. If you should have filed a return and did not, you might want to consider doing so now. If you didn't owe any tax, there shouldn't be any late filing penalty (which is based on the tax).

You should consult with your lawyer and tax advisor to ensure you do the right thing. Many lawyers advise their clients to do certain types of transfers that are not gifts for tax purposes, so you need to understand what you may have done and take the appropriate action. See your lawyer if you have any questions.

Here is a link to an article from Forbes magazine on this issue: IRS Targets Family Real Estate Transfers - William P. Barrett - Informer - Forbes
Labels:

Comments

Post a Comment

Popular posts from this blog

It's really Spring!

It's clearly Spring around here.  On the way to work this morning I saw several groups of Turkeys.  In each group there was at least one male presenting his tail for the females.  This looks like the classic picture you see of a Turkey around Thanksgiving with his big tail unfurled like a peacock.  But, you won't see that in November, it is courting behavior used in the Spring to find a mate.  Imagine if we humans had some sort of mating system like that.  The males puff themselves up, furl out their tails and strut around waiting for a female to find them attractive ... that would be something  ... oh, wait! Three Turkeys at my Bird Feeder - April 2011 (C) Edward Adamsky, 2011
2 comments
Read more

4 Planning Tips for Parents of Disabled Children

Buy enough life insurance . You can’t be replaced, but someone will have to fill in if you aren’t there. Your family will probably have to pay for some services that you used to provide. You can provide the money necessary, even if you don’t have much now, with life insurance. Set up a trust . Any assets left for a child with special needs, including life insurance proceeds, should be held in trust. Leaving money directly to someone with a special need jeopardizes public benefits. Some families disinherit children with special needs, relying on siblings to care for them. This approach is fraught with potential problems. The best approach is a trust fund set aside for the child with special needs. Write down the care plan . You must write down what a future caregiver will need to know about your special needs child. You may know everything but you need to write it down so it can be passed on. The memo or letter can be kept in the attorney's files or with the parent's estate plan...
2 comments
Read more

Clifton B. Kruse, Jr., Leading Elder Law Attorney, Dies at 74

Clifton B. Kruse , Jr., a revered elder law attorney who was admired as much for his kindness and generosity to fellow practitioners as for his grasp of the law, died December 30, 2008, in Colorado Springs, Colorado. He was 74. The cause was complications from Alzheimer's disease. For many in the field, Kruse set the standard for all that an elder law attorney can and should be. One of elder law's founding fathers, he combined a gentlemanly charm, warmth and caring with one of the sharpest and most ethical of legal minds. Wrote Arizona elder law attorney Robert Fleming in a tribute , "In my third of a century of elder law practice I have never met another lawyer who managed to pull together sophistication, heartfelt empathy, intellectual rigor and courtly manner in the same fashion Clifton Kruse projected. He did it, to all appearances, effortlessly. He was a friend and mentor to many in the elder law community (I count myself among those legions)." Kruse was the e...
1 comment
Read more