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Gift from Parents |
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Good Afternoon Edith,
My mother and father-in-law (who live in Hawaii) are giving my wife and I the home we current live in which is located in Vancouver Washington. Does this transaction create a taxable event or is the taxable event created when my wife and I sell the house? If so who pays the taxes? Who would be better fit to help us, an accountant or a lawyer?
Thank you,
Matt |
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Each of your folks can give each of you up to $12,000 this year with no federal gift tax due. That takes care of the first $48,000 of the value of the house. For the rest of the gift, they must file a federal gift tax return, but no actual tax will be due. The amount remaining comes off what they could leave you at their death free of federal estate tax -- at the moment that's two million dollars. When you receive the gift, you also take over your folks' cost basis for the house. When you sell, your capital gain would be based on that cost basis, plus any improvements you made later. I don't know about state gift taxes, sorry. |
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Edith
Originally published on August 14, 2007 |
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