Re: tax on 'gift of equity'
- From: "Phil Marti" <prm20871@xxxxxxxxxxx>
- Date: Sun, 20 Nov 2005 00:17:04 GMT
"Rick S." <lifeisgood@xxxxxxxxxxx> wrote:
> I'm going to sell my house to my grandaughter. It is easily worth
> 400K+, but I want her to have it for 300K. It is free and clear,
> only paid 16K, 20K on improvements, lived there forever
What the lender wants is irrelevant for your tax situation. There is no
immediate tax effect on your granddaughter.
You have a sale for $300,000 minus a basis of $36,000, leaving you with a
capital gain of $264,000, $250,000 of which is tax-exempt. (Your gain will
also be reduced by expenses of sale, such as recording fees and taxes, and
there's no problem with the seller paying all of them for the buyer.)
You also have a taxable gift of the fair market value of the property (get
an appraisal) minus $300,000, minus the $11,000 exemption in 2005. You'll
have to file a gift tax return, but will not have to pay any tax, assuming
you've made no taxable gifts before in your lifetime.
--
Phil Marti
Clarksburg, MD
.
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