I am selling some property in another state right now and I'd like to give some money to my child towards a home. Is there a way I can give the money as a gift or some way to invest the money so I'm not paying taxes on it in this state also? I'd like to give my child about $70,000.
2006-07-24 11:37:49 · 9 answers · asked by June C 1 in Business & Finance ➔ Taxes ➔ United States
You'd be better off consulting an accountant, a CPA, or a tax attorney than Yahoo answers. You will likely get several idiot answers here.
2006-07-24 11:40:48 · answer #1 · answered by me 7 · 0⤊ 0⤋
I would ask a CPA on this but I know that if you sell a house at a gain but you buy a house more expensive than the one you sell, then there is no capital gains tax. Not sure if it works with land or not. Also with selling a house, a certain amount is excluded from capital gains tax though I am not sure about land. That is why you need to ask a tax specialist.
As for the gift of $70,000, I think $70,000 is really high and your child may have to pay gift tax on that amount. Ask the tax specialist what the limit is on gifts before it is taxable and see if you can break the amount into multiple gifts such as give your child $25,000 Dec. 31 and another $25,000 Jan. 1. Then give the remaining $20,000 the following year.
2006-07-25 05:14:09 · answer #2 · answered by potatochip 7 · 0⤊ 0⤋
You must reinvest the proceeds into another piece of real estate within a year. It is either a section 1031 or 1231 transfer. I don't recall which at this moment.
If you give the money away, the most you can give any one individual in any one year is currently $11,000. You would have to pay gift taxes on any amount in excess of the $11,000.
If you want to give your child $70,000 do it over 7 years. Either $10,000 each year or $11,000 in years 1-6 and $4,000 in year 7.
If congress adjusts the gift maximum upward you may be able to do it in less than 7 years.
2006-07-25 05:39:58 · answer #3 · answered by Thrasher 5 · 0⤊ 0⤋
There is no way to avoid paying the income tax without reinvesting the proceeds in another investment property. To save on gift taxes, you could lend the money to your child at an adequate interest rate, then forgive $12,000/year of the loan until it is gone. This way, you would not be subject to gift taxes. Your child would need to actually pay you the interest in order for this to be respected, but the rate could be very low based on IRS rate tables. You should consult your tax advisor to properly structure this.
2006-07-24 14:49:14 · answer #4 · answered by taxmannyc 3 · 0⤊ 0⤋
(UK) Example (Idid this a few years ago) On a second property I had owned for years and needed to offload. Property worth £89000, mortgage outstanding £32000, profit: £57000, capital gains tax: Don't even go there. 1. Remortgaged up tp £82000, put money away (and spent some!) 2. Rented property out for 6 months 3. Sold property for £93000 Profit then £11000, less after legal expenses, estate agents etc. no tax incurred, only income tax on rental income.
2016-03-27 05:30:52 · answer #5 · answered by Anonymous · 0⤊ 0⤋
If you haven't sold the land yet, consider giving it the you child. He will probably pay less in taxes. You really should ask a tax expert.
2006-07-24 14:06:58 · answer #6 · answered by STEVEN F 7 · 0⤊ 0⤋
The only way to avoid taxes on it is to reinvest it into more real estate within a certain time. You probably need professional help.
2006-07-24 11:43:53 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Let me get this straight... You live the American dream, own land, make profit, but you don't want to pay taxes due??
Were you too cheap to consult a real estate lawyer before you sold it?
2006-07-24 11:41:18 · answer #8 · answered by snvffy 7 · 0⤊ 1⤋
call H&R block or your accountant to answer your questions.
2006-07-24 11:42:13 · answer #9 · answered by sophieb 7 · 0⤊ 1⤋