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

WILL YOU REALLY NEED LONG TERM CARE?

By Edward H. Adamsky             “The potentially catastrophic consequences of becoming disabled and needing long-term care is arguably the gravest financial risk that older adults face” says an Urban Institute report. But, will it happen to you? And, if so, have you saved enough money to pay for it? These are the worries we all face as we age. This is a worry even for younger folks because an accident or illness could trigger the need for care at any time.             The Urban Institute report shows that even though there are 6 million older Americans who need assistance with their activities of daily living, only about 500,000 folks are actually in nursing homes. Some use paid at-home care and many rely on unpaid family care. It seems that your chances of needing and paying for expenses care are relatively low. The stated average cost in the report is $138,000 for the ...
Post a Comment
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

Only one EIN per day!

The IRS has announced that representatives (lawyers, and others like me) can only obtain one tax ID number per day from now on.  They are known as Employer Identification Numbers or EINs and they are used for trusts, estates, businesses, and other entities that need a number for tax purposes but are not a person with a Social Security Number.  The announcement did not say that individuals cannot get more than one per day, just representatives. In most cases, this won't be a problem for me.  I usually only get one at a time when an estate or trust is created and needs one. But, there have been occasions when we created two trusts or two LLCs in one day and wanted two numbers.  Now it will take another day to get them (unless I ask the client to do it for him or herself.) The stated reason was to make the system work fairer and more smoothly.  I guess a few people were gumming up the system with lots of EIN requests. I don't know who those people wer...
Post a Comment
Read more