Posted on: 06th Feb, 2008 11:11 am
hello,
my divorced parents are giving me property to purchase a home. they are both still on the property and are signing a quit claim deed. the property was purchased for around 10k. i am hoping to sell it right away for 35-40k. 1. do my parents split the value of the gift? 2. is the value of the gift determined by the selling price of the property or do we need an appraisal? we live in michigan and the property is in tennessee.
my divorced parents are giving me property to purchase a home. they are both still on the property and are signing a quit claim deed. the property was purchased for around 10k. i am hoping to sell it right away for 35-40k. 1. do my parents split the value of the gift? 2. is the value of the gift determined by the selling price of the property or do we need an appraisal? we live in michigan and the property is in tennessee.
I apologize I believe I posted this in the wrong forum. Should I repost?
Don't worry Dee, it's ok if you have posted it in this forum. But yes, this query was quite appropriate for the quitclaim forums.
Anyway, coming to your query, if your property is transferred as a gift (without you paying any money in return to your parents or may be you paid some money less than what you bought the house for), the value of the gift will be determined by the fair market market value of the property at the time of transfer.
The fair market value is the price that the buyer has agreed to pay for purchasing your property. This is usually determined by the comparative analysis. Know more... .
Anyway, coming to your query, if your property is transferred as a gift (without you paying any money in return to your parents or may be you paid some money less than what you bought the house for), the value of the gift will be determined by the fair market market value of the property at the time of transfer.
The fair market value is the price that the buyer has agreed to pay for purchasing your property. This is usually determined by the comparative analysis. Know more... .
helping_user, Dee can also go for an appraisal. In fact that's a better option to determine the fair market value of the home.
dee, please check out this forum thread to know How you can set the home value .
Thanks,
Jerry.
dee, please check out this forum thread to know How you can set the home value .
Thanks,
Jerry.
Thanks for the responses.
"by the fair market market value of the property at the time of transfer."
Can you clarify for this me? Is their gift to me the time of transfer and FMV will need to be determined then?
Also, my question about splitting the value of the gift. Do both parents have to claim the gift? Can my father only report the gift on his taxes.
"by the fair market market value of the property at the time of transfer."
Can you clarify for this me? Is their gift to me the time of transfer and FMV will need to be determined then?
Also, my question about splitting the value of the gift. Do both parents have to claim the gift? Can my father only report the gift on his taxes.
Hi Dee,
"by the fair market market value of the property at the time of transfer."
This indicates the fair market value of the property to be determined when your parents will sign the quitclaim deed over to you.
If both parents are on deed and they are signing as grantors, then both should be able to report the gift in the tax return form. Do they file jointly? Also, they won't get deductions for the gift. They would have to pay the gift tax if the property value at the time of transfer is above $12,000. However, there are other criteria for getting exemptions on such tax. Please look through the exemptions on gift taxes.
Regarding determining property value, there are 2 methods:
1. Comparative analysis:
Through this method, real estate agents/realtors compare the home on sale with comparable properties sold off recently in the neighborhood as well as with similar properties that are up for sale currently.
2. Appraisal: This method involves an assessment of the property in details. Here the appraiser inspects the property and verifies the property data with the help of public records. He also does a market analysis and evaluates property as per the guidelines.
Hope this helps...
God bless you.
Samantha
"by the fair market market value of the property at the time of transfer."
This indicates the fair market value of the property to be determined when your parents will sign the quitclaim deed over to you.
If both parents are on deed and they are signing as grantors, then both should be able to report the gift in the tax return form. Do they file jointly? Also, they won't get deductions for the gift. They would have to pay the gift tax if the property value at the time of transfer is above $12,000. However, there are other criteria for getting exemptions on such tax. Please look through the exemptions on gift taxes.
Regarding determining property value, there are 2 methods:
1. Comparative analysis:
Through this method, real estate agents/realtors compare the home on sale with comparable properties sold off recently in the neighborhood as well as with similar properties that are up for sale currently.
2. Appraisal: This method involves an assessment of the property in details. Here the appraiser inspects the property and verifies the property data with the help of public records. He also does a market analysis and evaluates property as per the guidelines.
Hope this helps...
God bless you.
Samantha
Thanks for all the information!
I still am unclear though... My parents are not married. They will not have a joint return. Can only my father report the gift to me?
I still am unclear though... My parents are not married. They will not have a joint return. Can only my father report the gift to me?
Hi Dee,
What I feel is, if your mom transfer the entire property to your father and your father then gifts it to you, then only the latter will be able to report the gift to the IRS.
Take Care
What I feel is, if your mom transfer the entire property to your father and your father then gifts it to you, then only the latter will be able to report the gift to the IRS.
Take Care
But... if they are no longer married and not related, she would have to report the gift to him???? I guess it would have been easier if they would have taken care of the deed at time of divorce. Oh well. Thanks for all your input!
What matters is, who are on the title. Whoever wants to transfer property has to be on the title, so are your parents. And that's the reason both have to report the gift to the IRS.
I hope you understand.
Take Care
I hope you understand.
Take Care
Hi Dee,
If your parents have lived in the property for 2 out of the last 5 years then I would suggest that they sell it and give you the money. That way there are no capital gains tax. Just thought I would mention it just in case it might apply.
If your parents have lived in the property for 2 out of the last 5 years then I would suggest that they sell it and give you the money. That way there are no capital gains tax. Just thought I would mention it just in case it might apply.
That is a good point. I never thought of that.