My husband's family member wants to give us his house. It is valued around $48,000. How can this be achieved without gift tax implications? Would he be able to gift us half of the property this year and half next year?


I am assuming United States for this answer.

Before the end of the year they need to gift to you portion of ownership up to the gift tax exclusion (14,000) they also gift the same amount to your husband (14,000). Then early next year repeat the process. For a total of of 56,000

Because the value of the gift is under the 56K not all the exclusion for year two will be needed.

Because this is property there are a couple of other twists.

  • If the house has a mortgage the bank will not allow this. They will not want somebody not on the loan to now own the house. Paperwork will have to be filed with the local government to transfer ownership. In fact it will have to be done each of the two years.

  • Tax advice and real estate experience will be needed to make sure this is done correctly and on time.

  • When the house is transferred to you the basis of the property is the same as the relatives basis in the property. This will be very important when you go to sell the property. You should document this information now, and not in 20 years when you want to sell it.

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  • This property will stay in the family. We will not sell it. There is no mortgage on the property. So theoretically he can gift us half interest in the property this year and half next year. Is this correct? – Crystal Dees Dec 15 '14 at 17:57
  • You can't say that it will never be sold. The plan might be to never sell it but things change. You and the relative will need to file the proper forms with the local government. – mhoran_psprep Dec 15 '14 at 18:28
  • That is the condition, that it will stay in the family. – Crystal Dees Dec 15 '14 at 19:54
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    @CrystalDees If there are conditions on the gift, it's not a gift. If you don't have the right to sell, they haven't given you the house and it looks like you are just dodging taxes in some fashion by changing owners on paper, not in reality. – Alex B Dec 15 '14 at 20:35
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    @RickGoldstein I think you should write that up as an answer. – Alex B Dec 15 '14 at 20:37

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