AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Society of Tax Professionals, and the Institute of Management Accountants.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper.
Question QUESTION: HI John, My brother had his name joint with my mom since 1986. As of Nov. of 2006 it was put in his name solo. As of April of 2007 my mom died and my brother is suppose to split everything with me. Is that house a gift to him and or does he have to pay capital gain taxes. The house sold in Feb. of 2008 for 210,000.00 Can he file it as a gift or gain. What about the donor thing. Can he give me and my family a 1200.00 gift to each of us with no taxes involved. Thanks soooo much for you website....Dan
ANSWER: Dan,
Thanks for your question.
Bad news. The house is considered a gift from your mom to him. His basis is her original basis, not the value as of the date of the transfers or the value as of the date of death.
He will owe tax, at capital gain rates, on the difference between the proceeds from the sale and his basis.
Anything he gives you is a gift. However, he can give up to $12,000 annually to an unlimited number of people. For example, he could give you and your spouse $24,000 without having to file a gift tax return. Any gift in excess of the annual exclusion is considered a taxable gift and a gift tax return must be filed. However, he has a $1,000,000 lifetime exclusion so it is likely that no gift tax would be due.
Use of this $1,000,000 exclusion does reduce his estate tax exclusion that would kick in upon his death.
FYI, if the house had been inherited instead of being a gift, his basis would be fair market value as of date of death and little or no income tax would have to be paid.
Hope this helps.
John Stancil, CPA
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QUESTION: Thanks so much for the reply John, Thats allot of help. One more question if you don't mind. You were saying about the "Original basis" Is that the amount when she bought the house in the 60's or what the house appraised for or sold for? Do you know what the going rate is for the capital gain taxes are. "Ball Park figure" And what is the annual exclusion he can give out in a years time. John, thanks so much you have been such a big help. God Bless...Dan
Answer Original basis is her purchase price in the 60's. Capital gain taxes are zero for those in the 15% or lower bracket, 15% for all others. As I stated earlier the annual gift exclusion is $12,000 per recipient.
