Legal Question in Real Estate Law in California
Capital gains tax
I plan on gifting my son real property. if/when he sells the property, is his capital gains based on my cost basis which was transfeered to him, or is it based on the fair market value (appraisal), at the time of gifting? thank you.
2 Answers from Attorneys
Re: Capital gains tax
I believe it is the former, and most times it is better from a family wealth preservation standpoint to allow property to pass by will or trust (and the latter avoids probate as well), but there are occasional circumstances favoring an immediate inter vivos (during life) gift. I advise situation-specific professional advice from an estate planner working for you and able to run your specific numbers.
Re: Capital gains tax
It should be on your basis in the property; otherwise, people would avoid taxes by gifting appreciated property to someone in their family. A stepped up basis only occurs when the owner dies. I hope you are not considering gifting your resildence to him as almost all attorneys advice against that.
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