If I put my name on the current deed of my mothers home, will I or she be charged a gift tax by IRS?

Question

And if so, what will the gift tax be based on? The assessed value minus the amount currently owed? And who will make the determination of the assessed value and the amount owed? Is there some sort of chart that I can use to determine what I will be paying or she will be paying in the gift tax? Thank you.

Answer 1

If your mother deeds you an undivided one-half interest in her home, she may have to pay Gift Tax on that transfer. The value will be based upon the Fair Market Value on the date of the transfer. Assessed value for property taxes and any mortgage balance don't figure into the calculation in any way.

The value of the gift would be one-half of the FMV on the date of the transfer. Whether any Gift Tax is due from her will depend upon the numbers. The annual exclusion is $12,000 per donor, per recipient. There is also a lifetime exclusion amount that may lessen or eliminate the tax but that will reduce the Estate Tax exclusion when she passes away and may have adverse consequences after her death. For this reason, it's seldom a good idea to give a home to a child. The Estate Tax exclusion is currently higher than the lifetime exclusion on the Gift Tax making a bequest the preferred method of transfer in most cases since there will be less total tax due.

As the recipient of the gift, you would not owe any taxes at all on it. Gift Tax is always paid by the donor, not the recipient.

Answer 2

The post above me is correct on most of his points. The biggest benefit of waiting until deat for her to give you the house is the step-up basis rule. If she gives u the house through a will then you only have to pay income tax on the difference between the FMV at death and the sales price; if by gift it is the difference between what your mother bought it for and you sold it for. This can be hundreds of thousands dollar difference in some areas. However if it is believed that the value will skyrocket you may want to make a completed gift now therefore limiting your estate/gift tax liability. Remember the gift tax is only paid after a person makes $1million of gifts in their lifetime.

Answer 3

If you just add your name to the deed, there shouldn't be any tax involved.

Once a name rolls off, the property tax will most likely change.
Especially if you are in a state with caps on property.