Posted on: 06th Jul, 2010 06:45 pm
Hi,
The house is in NY, my father is ill and I was told my two brothers and I should have our names added to the deed so when he passes we will not have to pay estate taxes on the house. My father thinks if he does add us there will be a gift tax issue. What is correct? Thank you for your input
The house is in NY, my father is ill and I was told my two brothers and I should have our names added to the deed so when he passes we will not have to pay estate taxes on the house. My father thinks if he does add us there will be a gift tax issue. What is correct? Thank you for your input
Hi Steveskyline!
Welcome to forums!
If your father transfers the property to three of you as a gift, then he will be liable for the gift taxes. However, there is a lifetime gift tax exemption of $1000000. This means if the property is worth $1000000 and if your father had not taken advantage of gift tax exemptions, then he won't have to pay gift taxes as it will be exempted.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If your father transfers the property to three of you as a gift, then he will be liable for the gift taxes. However, there is a lifetime gift tax exemption of $1000000. This means if the property is worth $1000000 and if your father had not taken advantage of gift tax exemptions, then he won't have to pay gift taxes as it will be exempted.
Feel free to ask if you've further queries.
Sussane
adding names to the deed means signing a quit claim. this means, a transfer of the granters share of interest in the property to the grantee, without warranting the rights. on the other hand, a gift is a transfer of power where the granter will not have any authority over how the grantee uses the gift. also, the granter will have to pay a gift tax on the transferred property.
however, according to the us tax system, if the gifts worth is within 13,000 usd per year, then there will be annual exclusion of the tax, which means an exemption of the tax payments. but, even if the properts worth exceeds the stipulated amount, then an annual tax has to be paid only on the exceeding amount.
in your case, a quit claim deed seems to be more suitable.
however, according to the us tax system, if the gifts worth is within 13,000 usd per year, then there will be annual exclusion of the tax, which means an exemption of the tax payments. but, even if the properts worth exceeds the stipulated amount, then an annual tax has to be paid only on the exceeding amount.
in your case, a quit claim deed seems to be more suitable.