Legal Question in Tax Law in California

Who has to pay the property tax gain ??

We owned a small townhouse free and clear. We want to tranfer the title of the house to our sisters without go thru a sale transaction. At the time of signing the grant deed, who have to pay for the capital gain since the house now increased a lot since we bought it.?

Is this consider a gift? If it is, who have to pay the gift tax ? and how much (%) ?

Thank you very much for your help


Asked on 5/23/04, 1:47 pm

1 Answer from Attorneys
Scott Linden Scott H. Linden, Esq.

Re: Who has to pay the property tax gain ??

There is no capital gains if the there is a gift, because there is no gain realized. This does raise additional issues of which are longer than the discussion space here allows for.

Unfortunately, the gifter (you) would pay the gift tax because you are giving the gift. Annual gifts of up to $11,000 per person are allowed, you would be taxed on the difference between the condo's value and the $11,000 exclusion.

You may be able to effectuate your desire by using a Qualified Personal Residency Trust. This gives you the right to live in the property and then gift it at a lower value based on the length of your residency. The rules arre governed by IRS Tax Regulation section 25.2702-5.

Please feel free to contact me at (626) 578-0708 or online at No-Probate.com for additional information and review.

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Answered on 5/24/04, 3:08 pm


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