Legal Question in Tax Law in California
I own a property (residential real estate) with a large mortgage.
The equity is questionable.
If I deeded this property to my children, would they be subject to a gift tax?
If so, when would the tax need to be paid:
When the deed was granted?
When the deed was recorded?
At the time of disposition of the property. (When they eventually sell the property)
1 Answer from Attorneys
such a transfer is subject to federal gift tax. however, the annual exclusion ($13,000 per year per donor per donee) and/or the lifetime exclusion ($5,000,000) would likely reduce any tax due to zero (although in the latter case you would be using part of your lifetime exclusion). if the annual exclusion were sufficient no federal gift tax return would be required. to establish the value of the gift an appraisal of the property should be obtained.
real property tax issues should also be addressed (this depends upon whether or not the property is your residence and the assessed value of the property).
finally, you should retain a qualified estate planning attorney to review your situation and provide advice and recommendations as to whether or not this is the best way to accomplish your (unknown) purpose in considering this transaction.
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