Say your parents feel like adding your name to their home, do they file IRS form 709 now when they add you? or do they file form 709 when they pass away and you inherit the house?
Do you file form 709 when your parents add your name to their home?
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not an expert but I thought that using a trust was better in many ways than adding a child(adult) to a house.
esp if you would be planning on selling it and not incurring capital gains.
Every situation is different and my suggestion is worth what you paid for it
esp if you would be planning on selling it and not incurring capital gains.
Every situation is different and my suggestion is worth what you paid for it
Yes your correct , a trust .not an expert but I thought that using a trust was better in many ways than adding a child(adult) to a house.
esp if you would be planning on selling it and not incurring capital gains.
Every situation is different and my suggestion is worth what you paid for it
Not what we are trying to do, just try to lock in the California property tax by adding name early (laws are usually nonsense but you have to play with it anyways), before prop 19 took effect. So basically lock in your prop 13 property tax transfer.not an expert but I thought that using a trust was better in many ways than adding a child(adult) to a house.
esp if you would be planning on selling it and not incurring capital gains.
Every situation is different and my suggestion is worth what you paid for it
So once that is sorted out, the inheritance tax on form 709 is the one I'm trying to ask. Is the time of adding name the time you must "inherit" or does it only consider an inheritance when the parents pass away and remove their name from the deed?
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I know it's not the question you asked, but from a Federal (and state) income tax standpoint, if your parents give you the property before they pass, your tax basis is what they paid for it, with improvements added, less depreciation (if taken). If you inherit, your income tax basis is moved up to the value at the time of death. Probably a big difference here that will result in lots of capital gains taxes if you ever sell the property.
As to the Prop 19 changes, I'm not a lawyer, but my reading indicates they have to transfer title to you before it takes effect, 15 Feb 2021, or whenever your county "calls" it in effect. I don't see how only adding you to the title meets the requirement, but that's a question for an estate attorney. Obviously, if your parents gift you the property before they pass, Form 709 and appropriate gift tax would be due at that time, not later.
As to the Prop 19 changes, I'm not a lawyer, but my reading indicates they have to transfer title to you before it takes effect, 15 Feb 2021, or whenever your county "calls" it in effect. I don't see how only adding you to the title meets the requirement, but that's a question for an estate attorney. Obviously, if your parents gift you the property before they pass, Form 709 and appropriate gift tax would be due at that time, not later.
Most of the tax guys we used to talk to said that adding the name back then (we already did the name adding before Feb 15 2021) would guarantee the property tax of the past. Yes about the capital gain for sure, just wondering when is it considered "gift" (is it when they add my name to it or is it when they remove their name) and when is it considered inheritance (say when my parents both passes away).
I don't think adding your name to the title would automatically trigger a Form 709 event, unless it was specified somewhere that the value of your interest was enough to trigger gift tax. If the deed states each of your parents and you own 1/3 interest, that would probably do it. If the ownership percentage isn't specified on the deed that adds you, then your interest % is what your parents and you say it is - i.e. not enough to trigger gift tax.
If you inherit their interest, it is an inheritance, not a gift, so no Form 709.
If you inherit their interest, it is an inheritance, not a gift, so no Form 709.
They should NOT add your name to the deed. They should have a" transfer on death" document drawn up and recorded at the county recorder's office.. If you are sued for whatever reason or file for bankrupcy, the house your parents live in is fair game if your name appears on the title..They should either transfer it completely to you or TOD it upon their passing.
If your parents downright deed it to you while they are alive, they must file the 709. A 709 gift tax return needs to be filed on any gift of greater than $15k during a calendar year. The 709 would be due the following tax year if the gift is given after the tax deadline. I been through it and it can be a complicated form to correctly fill out depending on circumstances.
If your parents downright deed it to you while they are alive, they must file the 709. A 709 gift tax return needs to be filed on any gift of greater than $15k during a calendar year. The 709 would be due the following tax year if the gift is given after the tax deadline. I been through it and it can be a complicated form to correctly fill out depending on circumstances.
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Totally, lots of tax ramifications here!
Not really. Gifting just needs to be accounted for.
Loss of the step up in cost basis is not to be forgotten. Tax wise it is much better to inherite the property.
There is a reason to do it to grandfather the prop 19 before it expired. What it means in California is the property tax is based on purchase price x annual max allowed increase percentage instead of market price of the property annually.
The question here is joint tenant with right to survivorship being a gift or not.
If they are giving you a gift of 50% ownership, yes a gift tax return is in order. An appraisal would need to be done at the same time to determine actual market value.
Didn't mention percentage ownership, it was joint tenancy with right of survivorship
Consult a professional.
