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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 727
Experience:  Years of Experience in Business & Personal Taxes
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My husband and I gave a house to my daughter and her husband

Resolved Question:

My husband and I gave a house to my daughter and her husband in 2012. The house was appraised for $126,000. We are needing help completing form 709.
Submitted: 1 year ago.
Category: Tax
Expert:  DanielleCPA replied 1 year ago.

DanielleCPA :

Welcome and thanks for your question!

DanielleCPA :

Do you have any specific questions on Form 709?

Customer:

Not sure where to start or how to finish this form

DanielleCPA :

Ok. I'm guessing this is the first time you are filing a Form 709? Is that correct?

Customer:

yes

DanielleCPA :

Ok, thanks.

DanielleCPA :

Schedule B does not apply because you have never reported any prior taxable gifts.

DanielleCPA :

Schedule C does not apply because both you and your husband are living.

DanielleCPA :

And Schedule D does not apply because you are making a gift to your daughter, so there is no "generation skipping."

Customer:

my daughter and her husband

DanielleCPA :

Your daughter and her husband are both one generation below you so, so it still doesn't apply. generation skipping would apply if you were making a gift to two generations below, such as to grandchildren.

DanielleCPA :

Did you and your husband own the house jointly?

Customer:

When we gave them the house they were expecting a child. She was born in 2012 so can we also give it to her. Yes, my husband and I owned the house jointly

Customer:

yes

DanielleCPA :

Ok. The deed was transferred to your daughter and her husband equally, correct?

Customer:

yes

DanielleCPA :

If the ownership of the property was transferred to just the two of them, you can't back track and say you gave a portion to your granddaughter as well. Once you transferred ownership to your daughter and son-in-law, the property becomes theirs and is no longer yours to gift.

DanielleCPA :

So, it needs to be treated as being gifted to your daughter and son-in-law.

Customer:

ok, what next

DanielleCPA :

Because a husband and wife can elect gift-splitting (treating all gifts as being made 1/2 by each spouse), I recommend for simplicity purposes that each of you treat the gift as if you transferred your interest to only one person - e.g. you gifted your 1/2 to your daughter and your husband gifted his 1/2 to your son-in-law.

Customer:

ok

DanielleCPA :

I recommend that you start by filling out questions 1 to 19 on page 1 of the form. Most are your personal information, but I will assist you with the few that aren't/

DanielleCPA :

Line 10 will be 2.

Customer:

Ok I did that part already for me. Does my husband have to fill out a page 1 also?

DanielleCPA :

Be sure to check yes for #12 and and #17.

Customer:

ok

DanielleCPA :

Yes, your forms will essentially be almost mirror images of each other. So, I suggest you fill out yours first and then you can copy most of it onto your husband's.

Customer:

ok

DanielleCPA :

Next, move on to Schedule A.

Customer:

ok

DanielleCPA :

You will come back to fill out the rest of page 1 later.

Customer:

ok

Customer:

so my half would be $63,000

DanielleCPA :

Yes, your half would be $63,000.

DanielleCPA :

In the top half of Schedule A, you will show 1/2 of your gift to your daughter (or son-in-law), whichever you choose to report on yours. So 31,500.

DanielleCPA :

The 31,500 will be in column G. You still show the full $63,000 in column F for value of gift.

DanielleCPA :

You will also show your husband's gift in the bottom half of Schedule A - in the section where it says gifts made by spouse.

DanielleCPA :

Your total for part 1 will end up being $63,000.

DanielleCPA :

Carry that number to line 1 of part4 on page 3.

Customer:

what about the $13,000 limir

DanielleCPA :

You deduct that on line 2 of part 4.

Customer:

for each person, if we each give to each person don't we double the amount of the limit under the exclusion?

DanielleCPA :

You would deduct 26,000. $13,000 for each your daughter and son-in-law.

DanielleCPA :

You can either not gift split and each show 1/4 interest going to your son-in-law and daughter. That gives you each a $26,000 exclusion. Gift splitting accomplishes that also. You still each end up with $26,000 in exclusion.

DanielleCPA :

You each will have $37,000 reported on line 3 and 11 of part 4 of schedule A.

DanielleCPA :

You will carry the $37,000 to line 1 of page 1.

Customer:

So when I complete my schedule A, I will put both my daughter and her husband on this form under column B?

DanielleCPA :

Yes, both will be listed.

DanielleCPA :

They will need to be listed separately.

Customer:

under part 1 of schedule A?

DanielleCPA :

yes, part 1.

DanielleCPA :

Also be specific on the description of the gift - e.g list house and the specific address of the property.

DanielleCPA :

For example, 1/2 interest in House atXXXXX

Customer:

ok. Then my husband will do the same thing and list both daughter and son in law under his schedule A part 1 and then I would be put down under the gift from the spouse on his form?

DanielleCPA :

I would show your daughter as your gift on your return and then show son-in-law under the gift from spouse section.

Customer:

ok

DanielleCPA :

Your husband would show the son-in-law under your gift and then he would show your daughter under gift from spouse.

DanielleCPA :

Everything else will be identical on your returns.

Customer:

ok

DanielleCPA :

The tax that will compute on line 4 of page 1 is $7,540.

DanielleCPA :

However, there is a $5,120,000 lifetime exemption for taxable gifts, so you will not end up paying this tax.

Customer:

ok

DanielleCPA :

You will also enter $7,540 on line 7 for the applicable credit amount, so the balance due will be zero.

DanielleCPA :

That's it in a nutshell.

DanielleCPA :

Sign and get in the mail before October 15.

Customer:

Where do I put zero?

DanielleCPA :

Line 8 is where you put zero.

Customer:

can I get this chat sent to my email so I can open it up to view later?

Customer:

No other lines need to be completed in Part 2?

DanielleCPA :

No, no other lines need to be completed.

DanielleCPA :

I don't think you can have the chat sent to your email, but feel free to bookmark the site and it will bring you right back to the questions for future reference.

Customer:

ok and if I end up having another question can I still get help or would I have to pay $$$ again?

Customer:

Also, do I need to put this information any where on my 1040?

DanielleCPA :

You can rate the question and still be able to ask follow-up questions in the same thread without paying another fee, but it will no longer be in the chat format.

DanielleCPA :

The gift doesn't need to be reported on your 1040 anywhere.

DanielleCPA :

Nor does it need to be reported on your daughter/son-in-law's 1040/

Customer:

Ok..you have been great help with this form.

DanielleCPA :

You're welcome.

DanielleCPA :

I'm glad I could help you out!

DanielleCPA :

Have a wonderful evening!

Customer:

Thanks and you too!

DanielleCPA :

I see you were having some trouble rating. Sorry I had to check a box on my end.

DanielleCPA :

You should be good to go now.

Customer:

Question, Could I put just my daughter on the schedule A part 1 and then under the spouse part add my daughter again since my spouse is giving her a gift or do we both have to list the daughter and son-in-law on both of our schedule A's?

DanielleCPA :

Both of you can list both your daughter and son-in-law in the "your gift" section of Schedule A. If you are gift splitting, you would then need to also list both in the "spouse's gift" section of Schedule A.

Customer:

ok

Customer:

do I have to list them separately or can I for example write: John and Becky Rhodes - daughter and son-in-law

DanielleCPA :

you need to list them separately

Customer:

ok

DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 727
Experience: Years of Experience in Business & Personal Taxes
DanielleCPA and other Tax Specialists are ready to help you

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DanielleCPA
DanielleCPA
Certified Public Accountant
390 Satisfied Customers
Years of Experience in Business & Personal Taxes