The Tax Resources Blog

Archive for August, 2002

Gift Tax Death

Question: If 3 siblings own a house and want just one to own it, is there a tax consequence to anyone?

Three siblings inherited a house (under $90,000 in value). If both my brother and I gift our portions to my sister and have a new deed drawn up, do we have to pay any taxes when we file the gift Tax Return. The gift(s) will be over the 13,000 gift tax limit for 2009.

I heard somewhere that we don’t have to pay a gift tax, but anything over the $13,000 limit is subtracted from $2,000,000. Is $2,000,000 the amount that we can give away at our death without the people receiving an inheritance tax. Please verify, if you are an accountant or tax advisor. Thanks!

Answer: If title has not passed yet, there’s a simpler way to proceed. The two who are voluntarily surrendering their shares simply refuse the inheritance. That way 100% ownership passes to the remaining sibling directly from the estate and no Gift Tax returns need to be filed!

If title has already passed, the two gifting their shares will have to file Gift Tax returns unless they structure their gifts to pass less than $13,001 in equity per year. The excess over $13,000 does go against their $1,000,000 lifetime exclusion so no tax will be due unless any of them have already used that up.

The lifetime exclusion does reduce the estate tax exclusion (currently $3,500,000 I think) dollar for dollar so can have an impact when they pass if their estate(s) valuation is higher than the current exclusion adjusted for any gift tax exclusions used.

Aaron Futterman on Death And Taxes