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My mother in law inherited her mothers house along with her…

My mother in law inherited...
My mother in law inherited her mothers house along with her 2 sisters and brother. They want to give the house to the youngest sister, my question, is there a gift tax since no monetary exchange will be given? The bais of the house to the youngest then would be 1/4 of the fair market value of the house at time of death up to six months correct?
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Answered in 1 hour by:
6/26/2010
David L
David L, Attorney
Category: Estate Law
Satisfied Customers: 3,255
Experience: Estate planning and probate attorney since 1997
Verified
The way to probably have accomplished this is for the other three to disclaim their rights rather than inherit and then gift. If they gift it after inheriting it, they will each have to file a gift tax return. Can they still disclaim, or is it too late?
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Customer reply replied 8 years ago

They cannot disclaim, so I am guessing in order for it not to have tax consuequenes they will have to have her pay each of them 1/4 of the FMV of the house correct? If it is a loan then a reasonable rate of return on the loan to paid correct?

 

There really shouldn't be tax consequences to speak of because the gift tax exemption is $1mil. Thus, unless the value of the gift exceeds $1mil, there is no tax due. But, if the value of each gift exceeds $13,000 they will have to file a gift tax informational return (Form 709).
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Customer reply replied 8 years ago
So if the house's FMV is 100k each portion is worth 25k and thus each of them would have to have to file a gift tax return for the 25k unless they are married which in that case they get 26k correct?

Now you are right on the money. Although there are a few other alternatives. The easiest one is to gift $13,000 of it this year and the remaining amount next year. In that case, no worries about filing gift tax returns. The easiest way to accomplish is to get an appraisal and then gift a percentage of the total gift during 2010 and then in 2011.

 

For example:

 

Let's assume house is worth $130,000 and you want to gift up to $13,000 to not trigger a gift tax return. You could gift up tp 10% of the total interest and be safe.

David L
David L, Attorney
Category: Estate Law
Satisfied Customers: 3,255
Experience: Estate planning and probate attorney since 1997
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Irwin Law
Irwin Law, Attorney
Category: Estate Law
Satisfied Customers: 7,576
Experience: 30+ yrs. handling probate estate, wills, trust, inheritance & real estate related matters
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What is the total value of the home?
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