60-Minute Estate Planner: Fast and Efficient Illustrated Plans to Avoid Probate, Save Taxes, Manage Finances, Protect Assets, and Control Distributions in Changing Times (Sixty Minute Estate Planner) Inman News discusses gifting a home. Gifting a house to a child requires filing of a federal gift tax return. However, no gift tax will be due if the total lifetime gifts exceeding the annual $12,000 per gift per donee exemption are not more than $1 million. When you die, the value of your gift will be subtracted from your federal estate tax exemption, which is currently $2 million if you die in 2006. As a donee, your child will take over the adjusted cost basis for the house. If the child lives in the home as a principal residence at least 24 of the 60 months before its sale, Internal Revenue Code 121 allows the new owner to exclude up to $500,000 capital gains (up to $250,000 for a single homeowner) from tax upon sale.

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