I am selling my home to a friend, the FMV is $420,000.00, I am selling it to him as his for $310,000.00, My lawyer said I would have to pay a gift tax because I am giving him a gift of equity, The Gift tax would be based on $108,000.00, how would I know how much the gift tax would be that I would have to pay, I need to know this before I go any further with this sale,
2007-04-10 12:10:47 · 4 answers · asked by bare0713 1 in Business & Finance ➔ Taxes ➔ United States
ask the lawyer, (108000)x(1.0x)<- whatever the tax is
2007-04-10 12:14:53 · answer #1 · answered by Anonymous · 0⤊ 1⤋
You'll have to file a Gift Tax return, Form 709 http://www.irs.gov/pub/irs-pdf/f709.pdf . You can dip into your lifetime exclusion and avoid any tax, however that will permanently reduce your Estate Tax exclusion amount. Currently the Estate Tax is scheduled to expire in 2010 but will be reinstated in 2011 at last year's exclusion level ($1 million). The future impact on your estate will be impossible to predict since Congress can change the laws at any time. You may want to consult with an estate planner before you go through with this deal to make sure you don't sell yourself or your heirs short.
The taxable gift would be $110,000 less the $12,000 annual exclusion for a net taxable gift of $98,000. The tax on that if you opt to not use your lifetime exclusion would be $23,240.
2007-04-10 12:18:14 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 0⤋
you ought to owe capital tax at 15% on the 100,000 earnings once you promote it inspite of at the same time as she passes away. a much extra acceptable plan is for her to keep the identify in her call and in basic terms upload you because the beneficiary at her death. that's termed move On death or TOD. That way you nevertheless get the stepped up value foundation to her death value to compute your earnings which could be 0 in case you offered it quickly after death.
2016-12-03 19:42:00 · answer #3 · answered by Anonymous · 0⤊ 0⤋
bostonianinmo's answer implies that using the Unified Credit is optional. I don't see anywhere on From 709 where you are given the option to NOT use the credit. Maybe he will come back and explain that to me.
2007-04-10 12:33:55 · answer #4 · answered by STEVEN F 7 · 0⤊ 0⤋