Legal Question in Real Estate Law in Florida

I don't know if the question I am asking is more suitable for a Real Estate or a Tax Attorney.

My parents in Florida want to give their three children jointly their condo they will no longer occupy. It has DECREASED in value since its purchase in 1987 for $65K. It was on the market for the last 2 months at an asking price of $39K and did not receive any offers at or above that price. My sister lives in FL near them, and my brother and I live in CA. I believe that if done correctly, there will be no tax owed on the gift, and if the property sells (soon we hope) for under the $65K basis there will be no capital gains tax due. What steps should we take to accomplish the transfer? If we need professional help, what type of professional do we seek? Can we in CA acquire our share of the gift and then our share of the sale without traveling to FL?


Asked on 12/24/11, 9:39 pm

1 Answer from Attorneys
Richard Kaplan

You need both a real estate and tax attorney. Or at least a real estate attorney with some tax knowledge.

First, each person can give to anyone, each calendar year up to $13,000/person gift tax free. If it done by your parents, between them it is $26,000/person. If it is to 3 children, then multiply it by 3 and that equals $78,000 (if you include spouses of those children that would double it, and if you spread it over 2 years (since we are at the end of 2011 and the beginning of 2012) it is possibly to double it again if done correctly). So from a tax situation, you should be OK. Just make sure you work it through your CPA to do it correctly.

Therefore, an attorney can transfer the $65K property from the 2 parents to each of the 3 children, gift tax free by deed. I assume there is no mortgage involved and the property does not exceed the gift tax exclusion.

The children's basis in the property would have to be determined by the CPA to avoid the capital gains, if any. If the parents had sold it as their primary residence, there would be no capital gains or losses, and the cash could be divided the same is described above, gift tax free. So think about that.

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Answered on 12/25/11, 5:38 am


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