Can my parents just straight up give me their house?

Buying & Selling Real Estate
7yFollow

Can my parents just straight up give me their house?

Anthony Sinigaglio
Contractor · West Deptford, NJ · Member since 2018 · 23 posts · 8 votes

My dad and I have partnered up to invest in real estate. His credit is lousy but his house is paid off. My credit is good. Can he just give me his house, and later on I utilize the equity and my credit score for a refi?

0Reply
66 views

Most Popular Reply

Natalie KolodijBusiness Member
Moderator
Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
7y

They'll only pay gift tax if they've already gifted the 11.4 million dollar limit. 

If they give you something over $15k they will have to file a gift tax return, but it's just for reporting. There is no tax due until they reach that lifetime limit. 

This is why it's important to check with your tax professional and not the internet sometimes. 

Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
Kolodij Tax & Consulting
WebsiteView Page
4Reply
See this reply in the discussion

12 Replies

Jump to latestLatest
  • Frank Geiger
    Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
    7y

    I think there is a federal and state gift tax. 

    https://njbmagazine.com/monthl...

    0Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    7y

    They'll only pay gift tax if they've already gifted the 11.4 million dollar limit. 

    If they give you something over $15k they will have to file a gift tax return, but it's just for reporting. There is no tax due until they reach that lifetime limit. 

    This is why it's important to check with your tax professional and not the internet sometimes. 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    4Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Natalie Kolodij:

    They'll only pay gift tax if they've already gifted the 11.4 million dollar limit. 

    If they give you something over $15k they will have to file a gift tax return, but it's just for reporting. There is no tax due until they reach that lifetime limit. 

    This is why it's important to check with your tax professional and not the internet sometimes. 

     Natalie....Im curious as to how the gift tax works in states that allow the sale of property in exchange for non monetary compensation. For instance, Massachusetts allows you to sell property in exchange for a compensation of "love." Other states will though make you sell it for a dollar amount. I assume the property would be subject to a federal gift tax in that instance, but there is also compensation given for the property.

    Also, how would one calculate their basis in a house purchased for love.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    0Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Russell Brazil:
    Originally posted by @Natalie Kolodij:

    They'll only pay gift tax if they've already gifted the 11.4 million dollar limit. 

    If they give you something over $15k they will have to file a gift tax return, but it's just for reporting. There is no tax due until they reach that lifetime limit. 

    This is why it's important to check with your tax professional and not the internet sometimes. 

     Natalie....Im curious as to how the gift tax works in states that allow the sale of property in exchange for non monetary compensation. For instance, Massachusetts allows you to sell property in exchange for a compensation of "love." Other states will though make you sell it for a dollar amount. I assume the property would be subject to a federal gift tax in that instance, but there is also compensation given for the property.

    Also, how would one calculate their basis in a house purchased for love.

     I'll put in the time to do the research as soon as I get a client who has purchased a house in Mass. for "love". 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    2Reply
  • William Matory
    Rental Property Investor · Jacksonville, NC · Member since 2019 · 18 posts · 16 votes
    7y

    @Anthony Sinigaglio

    You can try and do a “QUIT CLAIM” Deed through whatever county/city office the home is in...They would be transferring the house for the “consideration of $0”.

    The catch is if you ever sell it your “basis” is $0...If you sell it for $100,000...your gonna get taxed on $100,000.

    You should refinance cash-out for a chunk of the value.

    1Reply
  • Darina Pogodina
    Realtor · Fall River, MA · Member since 2015 · 82 posts · 16 votes
    7y

    @William Matory, 

    So $100,000 will be like a capital gains tax? What if the person owner-occupies it for over 2 years in Mass? 

     Also, is federal gift tax applies to the seller or buyer? 

    Thank you, 

    0Reply
  • Ryan Proffit
    Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
    7y

    @Anthony Sinigaglio could you co-sign on his refi? Your credit could help get it done possibly. I also have a dad with lousy credit who wants to partner up.

    1Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @William Matory:

    @Anthony Sinigaglio

    You can try and do a “QUIT CLAIM” Deed through whatever county/city office the home is in...They would be transferring the house for the “consideration of $0”.

    The catch is if you ever sell it your “basis” is $0...If you sell it for $100,000...your gonna get taxed on $100,000.

    You should refinance cash-out for a chunk of the value.

    This isn't correct. 

    The transferring of the deed doesn't impact the tax treatment. 

    Transferring someone a house for $0 is gifting for tax purposes. 

    And the person who receives the house keeps the same purpose as the person gifting it had. 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    2Reply
  • Anthony Sinigaglio
    OP
    Contractor · West Deptford, NJ · Member since 2018 · 23 posts · 8 votes
    7y

    Thanks, @Natalie Kolodij! I currently do my own taxes since I am a lowly rat in this race, but once I get going I’m definitely going to bring in a pro.

    0Reply
  • Anthony Sinigaglio
    OP
    Contractor · West Deptford, NJ · Member since 2018 · 23 posts · 8 votes
    7y

    @Ryan Proffit hmm I suppose I could!

    1Reply
  • Jeshua Patrick
    Rental Property Investor · Charlotte, NC · Member since 2017 · 298 posts · 232 votes
    7y

    @Anthony Sinigaglio he may be able to add you to the deed at which point at least the property would pass to you upon his death without having to go through probate; however, I’m not sure you would be able to do a cash out refinance without his consent.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free