Re: Taxes on Real Estate Deal - Posted by Rick V
Posted by Rick V on April 17, 2000 at 13:22:32:
No capital gains taxes are due, because no income taxes are due on a gift. However, if you give it outright all at once, you will use up some of your unified credit for gift & estate tax purposes. Your wife and you can each give $10,000 a year to each donee without using up any of your unified credit.
What you should do is each give $10,000 (approximately 1/4th of the property) to you son each year. In approximately 4 years, you will have given it all away, gift and income tax free.
The best part of this is if your son lives in it as his pricipal residence for at least 2 years after he has received the whole property, he can sell it tax-free.