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Tax Law (Questions About Taxes)/Transfer of House to Family Member

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Question
Mr. Stancil, I have joint legal ownership of a small valued house in Georgia with my sister. We both have a 50% ownership in the house which is only worth around $20,000. The house was built by our grandparents in the mid 1950s for only around 5,000 dollars. My sister is interested in selling the house and keeping all the proceeds from the sale in order to give this money to her sons as a gift. My sister has asked me to sign a legal document transferring my ownership of the house to her so that she can sell it. I am willing to work with her to do all of this; however, I do not want to incur any federal or state tax liability. My sister does not think I will have to pay any taxes if I sign over my part of the property to her before she turns around and sells the house. I have already inquired with others, and I seem to give a variety of answers to the question of whether or not I will have to pay taxes on the property once my sister sells the house. Can you give me any thoughts on my situation in order to avoid paying taxes? Thank you in advance for any help you can provide!

Answer
Carl,

Thanks for your question.

If you make a gift of your interest in the house to her, the value of the gift would fall below the annual exclusion amount of $14,000.  So there would be no gift tax concerns for you.  

Once you transfer title to her by gift, what she does with the house is not your concern.  I presume you inherited the house.  If so, her basis in the house will be the fair market value as of the date of death.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John 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 am Professor Emeritus at Florida Southern 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 CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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