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Richard
Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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I bought a house for $475K in 2011 in CA. The loan amount

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I bought a house for $475K in 2011 in CA. The loan amount is now about $270. If I add another person who is not related to me to the title what are the tax consequences for her and for me?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good evening. Is this going to be a gift of a 1/2 interest in the house? Thanks.
Customer: replied 3 years ago.

Yes 1/2 interest.

Thanks for your response. First, you want to make sure you get your lender's consent as your loan documents are likely to require their consent to any transfer of interest in the house. Second, there will be no income or gift tax consequences. Because it's a gift, it is not income and thus there are no reporting or tax requirements for either income tax return for you or her. Furthermore, CA has no gift tax. On the Federal level, there also should be no gift tax consequences with regard to the gift in the amount of 1/2 of the equity value. 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 $5,250,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,250,000 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 $5,250,000.



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