My husband and I own some land on a US territory island. Do we pay taxes if we donate it to family?

Question

I know there's that gift amount, but I forgot what it is. It's a small piece of land.. 1268 square meters according to our tax bill and it's assessed at a little more than $26,000. If we donate this land to my sister in law and her husband, do my husband and I have to pay any kind of tax? Thanks!

Everyone is a US citizen. Just the land is a US territory, (not in the continental states)

Land is in my husband's name only, but it will be in both my sister in law and her husband's name. We were given the land, as we are giving it to them. My father in law gave his land to his kids, and we don't want it. We've been paying taxes on it yearly, but now want our hands free of it.

Answer 1

The location of the land doesn't matter.

If you are and your husband are US persons, and either one of you gifts (*not* donate) cash or property to another individual in the amount of more than $12,000, you will need to file a form 709.

Do you own the land jointly with your husband?
Do you plan to gift the land jointly to your brother and sister in law?

If yes, you would still do the form 709, but with 4 gifts (you to brother, you to SIL; hubby to brother, hubby to SIL), you won't have made a taxable gift unless the appraisal comes in at $48,000. (Assessed values aren't accurate enough, pay for an appraisal.)

When you make the gift, give your brother and his wife a statement about what you paid for the land. Generally, the person who receives a gift also gets your basis. If it's gone up in value, they get to pay the capital gains when they sell.

Answer 2

Are your sister-in-law and hubby, citizens in the states and not in the territories? They will probably have to pay taxes on it if they are. They would have to pay taxes if land was given to them outside of the US, so why not the territories? You probably need to find a tax expert on this question though. 1. to make sure that this is correct and 2. to see what you can do to minimize any taxes.

Notice I did not say citizens of the US but citizens in the US. There is a difference. A US citizen living in one of the territories is not treated the same as a citizen living in the states. A couple of differences are the right to vote and income tax.