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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: Rent-to-own, of sorts Date: 3/19/2014 7:37 PM
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Opv1419: "Thanks. I would like to give my relative sufficient warning if it is warranted, i.e., if he is going to be in for a major tax surprise once he gifts the house to his son next year. I recall many years ago that my parents gifted the old homeplace to me and my four siblings equally in a "share and share alike" arrangement. Back then (in Alabama anyway) the house was conveyed "in consideration of ten dollars...." and once the document was filed, the house was ours and we basically just began paying the taxes and upkeep on the house after that point, until the house was later sold, at which time we each had to calculate a capital gain/loss on our taxes for that year. There were no capital gain/loss for my parents and no gift taxes for the children.

You answered each question in the affirmative, that there are tax implications. Can you elaborate a bit?"


I am not Peter, and he does this tax stuff better than me, but here goes anyway.

For federal tax purposes, the gift tax requirements (filing and payment of gift taxes, if required) fall on the donor - your relative.

Gift tax filing will be required for a gift larger than the $14,000 annual exclusion amount. If you relative is married, then a split gift with the spouse is possible and that would become $28k. If the relative's son is married, then also gifting to his spouse would double that to $56k.

You never mentioned the value of the property. Unless the place is a McMansion or exotic, expensive estate (or your relative has previously used his lifetime exemption amount), it is unlikely that your relative wouldd actually owe gift tax; more likely he/she might use some of his/her lifetime exemption amount.

State Gift taes would be a potential question for your relatie and his sone, and I have no comment to offer regarding the possible state gift taxes, other than somes states have them.

You did not mention the value of your old homeplace, but you did say that both your parents gifted to you and four siblings, so two donors by five receipients would mean o gift tax due from your parents if the place was then worth less than 10x the then annual exclusion amount (many years ago when the gift was completed).

Regards, JAFO
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