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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29579
Experience:  Taxes, Immigration, Labor Relations
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My husband and I are consider purchasing 40 acres of land

Customer Question

My husband and I are consider purchasing 40 acres of land that is currently in a life estate held by his grandmother and my husband's mother and aunt are the remainderman. We are puchasing the land below market value and want to know the best way to proceed in order to avoid federal taxes. Can the remaindermen sign it back over to the life tenant so that it can be gifted to us or will that negatively affect all parties?
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Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

The property may be simply gifted - that is not an issue.
We just need to determine WHO is gifting what is the gifted value.

Expert:  Lev replied 1 year ago.

Correspondingly we need to determine the value owned by the remainder-man and the value of the life estate holder.

The sale below the market value would be treated as a combination of the sale and gifting.

For instance - your the property with FMV $100k is selling for $40k - that means

40% of the property is sold and 60% of the property is gifted.

Let me know if you need any help with reporting.