Tax Aspects of Gifting a Home

Learning Objectives

• To discuss the multitude of considerations surrounding gifting and the subsequent sale of a home.
• To review the gift tax consequences of transfers of homes.
• To review part-sale part-gift transactions
• To analyze how to determine the cost basis
• To inspect installment sales and installment notes
• To discuss the changes made by Proposition 19 for clients in California.

Course Description

This CE/CPE course will explain the caveats and considerations of giving away the family home from the initial transfer to the final sale. We will discuss the methods of transfer, capital gains issues, installment notes, related party rents, and how to devise the best tax outcomes for both the donor and done.

Giving away the family home is a commonly broached topic by all taxpayers, not just those subject to the gift tax. Addressing the situation correctly, and hopefully, upfront can avoid paying excess tax to the IRS and aid taxpayers in transferring an invaluable asset to a family member.

There is a multitude of considerations surrounding gifting and the subsequent sale of a home. These questions covered at the time of transfer include whether to gift the property, sell the property to a family member, or perhaps set up a part-sale part-gift transaction.

If a sale is part of the deal, not only is minimizing capital gains tax a key consideration but also avoiding disallowed losses under gifting rules. Additionally, the parent may choose to remain in the gifted property, or the child may move in before it is transferred, creating new tax conundrums.

Holding the property until death would provide a basic step up, but there are times when gifting a home to a family member is the best alternative. In these situations, the tax adviser needs to structure the transaction in the best interest of both the related parties.

Key topics covered in this CE Tax webinar:

• Basis
• Capital Gains 
• Part-sale part-gift transfers 
• Installment sales and installment notes
• Gift Tax 
• Pending Legislation Considerations

With the help of this CE/CPE webinar on taxation speaker Lawrence Pon, walks you through the numerous considerations of transferring a home to a related party, including tips to minimize capital gains, methods of transfer, installment sales and installment notes, and non-tax considerations when gifting this primary asset. 

Overview

• Basis in home: IRC 1012

  3 mins
• Property acquired from a decedent

  12 mins
• IRC 121 & 1031

  39 mins
• Basis calculations

  44 mins
• Part-Sale Part-Gift transfers

  57 mins
• Installment sales & Installment notes

  65 mins