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Worried About Taxes |
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A widowed parent, who has 3 children owns lake front real estate. The son wants to build a perment primary residence on the property. The whole family thinks its a good idea. The property was purchased by both parents for $20K 20+ years ago and is appraised for about $350K today. One parent died in 1992. What is the least cost effective and legal way to do this with respect to minimizing taxes? |
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It's not quite clear what you're worried about. Is the parent planning to give the land to the son? If so, the son takes over the parent's cost basis, which is a lot more than the original purchase price. It includes everything spent on permanent improvements over the years, and it may have changed in 1992. At any rate the question of taxes wouldn't arise until the son sold his home years from now.
If it's gift taxes you're worried about, that parent can give the son -- and/or other kids -- up to a million dollars with no federal gift tax due (I don't know about South Carolina). The value of the gift would just come off what the parent could leave at death free of federal estate tax -- currently two million dollars.
For something this valuable, it's probably wise to consult a lawyer who specializes in estate planning before doing anything. |
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Edith
Originally published on September 2, 2007 |
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