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The Real Estate Gift

31 May 2013
Posted On
The Jana Caudill Team
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I am not an authority on tax law, so I’m not qualified to give tax advice.  If, however, this scenario sounds familiar and you find yourself on either the giving or the receiving end of a gift of Northwest Indiana Real Estate I’d like to advise you to consult with a tax professional to learn of the possible tax obligations you may be facing.  Now, on to some of the basics:

If you are giving a gift of Real Estate, as with any gift in the eyes of the IRS, there are potential tax implications.  This article references a law from 2009 that states gifts totaling under $13,000 in value given over the course of a calendar year do not require the giver to file a gift tax return.  If the total is over $13,000 you will need to file form 709.  The good news is even if you are required to file a form 709 it does not automatically mean you are going to owe any tax.  There is a lifetime $5,000,000 gift allowance tax exemption, according to a 2011 law.

Gifts are tax deductible ONLY if given to an eligible charity.  Your Great-Uncle Julius is probably not an approved charity.  As well, loans are not considered gifts.

As the recipient you do not have to pay taxes on a gift received because the IRS does not look at the value of the gift as income.  One stipulation here is if you in turn receive income, such as rent from tenants on a building that was gifted to you.  You still don’t pay taxes on the value of the Real Estate, but you will have to claim the rent collected on your tax return.  And finally, at such point in the future you decide to sell the Real Estate you had been gifted in the past you may have a capital gains tax obligation.

Plenty of food for thought.  The best advice I can give you is to consult with a tax professional prior to gifting.  It may save you some money in the end.  Here’s the latest on the gift tax from the IRS.

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