How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Richard Your Own Question
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55147
Experience:  29 years of experience as a tax, real estate, and business attorney.
Type Your Tax Question Here...
Richard is online now
A new question is answered every 9 seconds

I would like to transfer my home to my grown daughters. Do

This answer was rated:

I would like to transfer my home to my grown daughters. Do they pay inheritsnce tax?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. Are you planning on transferring the property during your life or upon your death? Thank you!
Customer: replied 3 years ago.

Should I transfer my property during my life time? If so do the daughters pay inheritance tax at that time?

Thanks for following up. Can you tell me the value of the house? Thanks.
Customer: replied 3 years ago.

value of property: house approx $350,000 and cabin about $300,000

Thanks. One big tax difference between transferring a property during your life versus at death is the basis step up at death. If you transfer property during your life, your basis in the property (your purchase price plus any improvements) transfers over to your daughter. If you transfer the property at your death, the basis gets increased to its fair market value. So, if the property has appreciated substantially, you would be better of tax wise to transfer it at your death. On the liability side, should you think you'll ever need Medicaid assistance, you'd be better off transferring it now to avoid it being considered in your eligibility for Medicaid aid.

Back to the tax side, neither the Federal government nor Mass. has any inheritance tax. If transferred at death, Massachusetts has an estate tax payable by the estate, but the first $1,000,000 is exempt. For Federal taxes, the first $5,250,000 of your estate is exempt and the estate would only be taxed for amounts in excess of that.

If you gift the property now, there should be no gift tax consequences. Mass. has no gift tax. On the Federal level, 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.

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!
Richard and other Tax Specialists are ready to help you
Thank you so much for the positive rating! I appreciate having had the opportunity to serve you! If I can be of assistance to you in the future, just look me up and I will be happy to help! For easy access, my bookmark is:
Thank you also for the bonus! I appreciate your kindness!