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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15185
Experience:  15years with H & R Block. Divisional leader, Instructor
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My father, whose estate is worth about a half million

Customer Question

My father, whose estate is worth about a half million dollars, wants to build an addition onto my house that will be an in-law apartment for him to move to so he can be close to me. He now lives in Florida, and I live in California. I have a sister who is a co-benificiary of dad's trust.
I have heard that there is a way, within the IRS rules for my dad to set up an "advance" to me on my share of his estate to build this addition. We would like this advance to come out of my share of his estate at the time of his passing. The cost to this addition will be around $100,000. How would we go about setting this up? Is it possible to do this with an exemption to the $14,000 gift tax limit? Can you direct me to where in the IRS regulations I could find this information. I have tried on my own and been unsuccessful.
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.


If your father gives you more than $14000 in a year (by cash or building this for you) he will need to report that gift on form 709. He will not need to actually pay tax on the gift over $14000 but it will reduce his Estate amount.

The gift tax and the estate tax work hand in hand. His annual limit is $14000 and lifetime limit is $5,450,000 (2016). His $4.45 mil is reduced by the amount over the $14000 in the year. Leaving his estate with less to transfer tax free.

Expert:  Robin D. replied 1 year ago.

26 U.S. Code § 2503 - Taxable gifts