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Richard
Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 54986
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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My husbands grandparents passed away about 4 years ago and s

Customer Question

My husbands grandparents passed away about 4 years ago and his mother and uncle inherited the house. She bought him out since we did not have the money and were interested in buying the house. She bought him out for $127,500, property was valued at $184,000 at time of buy out and listed for $250,000. We are buying the house from them, making monthly payments for the past 4 years (we live in the house and in-laws do not reside there with us). For the past 4 years, every month I deposit the monthly payment in their savings account and they then pull money out of that account for taxes and insurance when due. My mother in-laws name is ***** ***** deed/title and ours is not. How would we add our names to the deed/title without being penalized for gift taxes (since not gift we are purchasing), inheritance tax, etc? Please advise how we should handle this so it is the best scenario for all parties involved.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Richard replied 1 year ago.

Good afternoon. My name is ***** ***** I look forward to helping. You would add your names to the deed by having your MIL sign a quit claim deed transferring an undivided 50% interest in the house to you and your husband as a joint tenant with right of survivorship (I'm suggesting that so that upon death, the title automatically vests in you and your husband regardless of what her will says and without probate). The deed needs to be witnessed, notarized, and then recorded in the real property records of the city/county in which the property is located. You need not worry about gift taxes because there won't be any. Recipients of gifts are not subject to gift tax. And, there should also be no gift tax due from the donor. Each donor can give $14,000 per year per person under the annual gift exclusion. In addition to that, for any amounts in excess of the $14,000 in a year, each person has a $5,430,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,430,000 in gifts over and above the $14,000 annual gift exclusion amount without incurring gift tax....the donor must file a gift tax return to let the IRS know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative additional gifts have exceeded the $5,430,000.

Recipients of gifts are not subject to gift tax. And, there should also be no gift tax due from the donor. Each donor can give $14,000 per year per person under the annual gift exclusion. In addition to that, for any amounts in excess of the $14,000 in a year, each person has a $5,430,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,430,000 in gifts over and above the $14,000 annual gift exclusion amount without incurring gift tax....the donor must file a gift tax return to let the IRS know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative additional gifts have exceeded the $5,430,000.

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