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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
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Experience:  Over 20 Years experience
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My uncle left me and my brother his house when he passed away.

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My uncle left me and my brother his house when he passed away. The house was in my brothers name but the will spelled it all out. My brother is now stating that after the taxes are settled that his accountant stated that he can only give me 13k a year, NOT MY PORTION, as a gift until all the money is gone or give me my share at 35% penelty. Is this true?
Submitted: 2 years ago.
Category: Tax
Expert:  R. Klein, EA replied 2 years ago.
Your question is more to do with legalities of the will than taxes.

The $13K he refers to is a gift tax exemption. He is telling you that to avoid GIFT tax on your brother, he can only gift you $13K per year. This is only half-true.

He can gift you an amount up to a million dollars in one year, but he would need to file a gift tax return to claim part of his lifetime exemption. If your brother's entire estate is less than a million dollars, this will not affect him now or later in life. If we're talking about a $100K, again, he can file the gift tax return and he will be exempt from the gift tax.

Recipients never pay gift tax.

The first question I would ask an attorney, though, is whether he needs to split the inheritance of the house in the first place, which it sounds like he must. There is no gift or estate tax on this transaction. It needs to be titled properly.

Your uncle probably made the mistake of willing the house to both of you, meaning neither can sell it or do anything without the other's agreement. His intent was to give you half the value each, not to take a chain saw and split the house in two halves.

As such, he has made a mess, I am sure, and quite unintended.
Customer: replied 2 years ago.
The house was transferred into my brothers name from my uncle years ago. When my uncle passed the will clearly states that the house is to be divided 50/50. My brother today told my son that he has to go to the accountant this weekend and give him some papers and they will tell him what he has to pay in taxes to the state/fed on the house. He said that he can only give me (my half of the house) 13 or 14k per year, as a gift from my uncle (even though it was not in his name) or I can take my half and pay a 35% penalty. I heard my brother once say that they did not know if they were going to do the taxes from when my uncle owned the house or when it was transferred to by brother.
Expert:  R. Klein, EA replied 2 years ago.
Your brother may have owned the house legally BEFORE your Uncle passed away, meaning it was not your Uncle's to give away in his will!

Again, there is no reason for a 35% penalty on anything here.

If your bother wants to gift you half the house, he can do so without paying ANY tax or ANY penalty or ANYTHING other than his accountant who does not see you as his interest if he uses his gift-tax exemption. Your brother's accountant can charge an extra couple hundred bucks to do the gift tax return.
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 2882
Experience: Over 20 Years experience
R. Klein, EA and 5 other Tax Specialists are ready to help you
Customer: replied 2 years ago.
No Sir... The house went from my uncle to my brother about 4 years ago. It was never owned by anyone else. In my uncles will it stated that everything was divided 50/50 between me and my brother.
Expert:  R. Klein, EA replied 2 years ago.
If your brother did not get the house until Uncle died, you need to contact a lawyer to get the house titled in both your names. This is not a question of tax at this point.
Customer: replied 2 years ago.
Last thing: It (the house) was owned by my uncle. On 09/27/2011 it was changed to my uncle and my brother....on 12/01/2011 it was changed to my brother and his wife then my uncle passed in June 2011. The will was 50/50 my brother and I only
Expert:  R. Klein, EA replied 2 years ago.
Please check your dates. You said your Uncle died before he had the ownership changed in September and he was still an owner?
Customer: replied 2 years ago.
SOLD BY MY BROTHER Previous Owner Sxxxxxx Mxxxxxx D JR & Bxxxxxx Sxxx Sale Date 12/1/2011 Sale Price 127500 Deed Type Volume/Page 6870 / 145 Valid Sale Yes Previous Owner Gxxxxx Jxxxxxxxx D (LU) Mxxxxxx D JR & Sale Date 9/27/2011 Sale Price 0 Deed Type Volume/Page 6849 / 281 Valid Sale No Previous Owner GxxxxxJxxxxxxx D Sale Date 2/11/2004 Sale Price 0 Deed Type Volume/Page 4897 / 120 Valid Sale No
Expert:  R. Klein, EA replied 2 years ago.
You need a lawyer. Your brother did not have clear title when he sold in Dec.
Customer: replied 2 years ago.
Are you sure because Barbara is his wife? Just wanna have my ducks in order when I go to lawyer
Expert:  R. Klein, EA replied 2 years ago.
You had a legal claim to a share of the title when brother sold to for 127k. There is a cloud on the title. You need a lawyer.
Customer: replied 2 years ago.
Can you recommend what type of lawyer I would go to?
Expert:  R. Klein, EA replied 2 years ago.
You need a family law or a real estate attorney. Find one that deals with family law and wills is best.
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 2882
Experience: Over 20 Years experience
R. Klein, EA and 5 other Tax Specialists are ready to help you
Expert:  R. Klein, EA replied 2 years ago.
You had a legal claim to a share of the title when brother sold to wife for 127k. There is a cloud on the title. You need a lawyer.

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