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Irwin Law
Irwin Law, Attorney
Category: Legal
Satisfied Customers: 6848
Experience:  Lawyer & Real Estate Broker, 30+ years, foreclosure, land contracts, inheritance, probate.
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I live in Michigan. 15 yeares my mother quit

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I live in Michigan. 15 yeares my mother quit claimed deeded 10 acres of land (tenants in common). My mother is alive and the property is now being sold. Does this mean that I will receive 50 percent of the sale price? Also, if the 50 percent is not over the annual gift amount of $12,000.00, do I pay taxes on the amount received? Also, before the sale of the land my sisters wanted their share of this "gift" of property that my mother made to me so I had my 50 percent of ownership quit claim deeded to my sisters and me. For tax purposes can I say that I gave each sister a gift that did not exceed $12,000.00? Hope you can help because today we are suppose to sign the selling agreement and one sister is refusing to sign because she doesn't want to pay tax on the money received. I'm in a mess now, please help. Thank you, XXXXX XXXXX (XXX) XXX-XXXX

Hello. The annual exclusion from gift tax is $14,000 for each person in 2013. So if your 50% from your mother is not over that amount, then whatever you gift to your sisters is couldn't be over that amount either. Also, the gift tax is on the donor/giver, not the donee who receives it. Sisters cannot have a gift tax problem.

I hope that this information is helpful. Please click on a smiley face so that I will be compensated for assisting you. If you have a follow up question please send me back a Reply without entering any rating. Also, be sure to verify this information with a local attorney who is familiar with your local laws and procedures. Thanks again for using Pearl.Com- Just Answer. Your business is appreciated.

Customer: replied 3 years ago.

Thank you for the prompt reply but I don't feel that my question was answered so I understand. The sale proceeds came out to be $39,000.00 (my share of total sale) for three lots. Each sister, including me, received 6,500.00. Can I say that I gifted (under $14,000.00) the $6,500.00 to each sister?

I've done research on the tax consequences for gifting and I don't see where only the donor(giver) has tax liability.

Thank you,
Joyce

Hello Joyce: Yes. Your gift to each sister was a 1/6 interest in 50% ownership. The value of the gift based on the selling price is far below the one year gift tax exemption of $14,000 to each person. It is the donor who pays the gift tax. See: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes#1

I hope that this information is helpful. Please click on a smiley face so that I will be compensated for assisting you. If you have a follow up question please send me back a Reply without entering any rating. Also, be sure to verify this information with a local attorney who is familiar with your local laws and procedures. Thanks again for using Pearl.Com- Just Answer. Your business is appreciated.

 

 

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