Commercial Landlord · Oshkosh, WI · Member since 2013 · 299 posts · 88 votes
Has anyone taken the steps to give there child assets in the form of equity in property? Would it be in my best interest to do this as I get older to get rid of my property without my son getting taxed on it? I already have over 4 mil in equity. By the time I die it could be 10 million. Does the fed estate tax start at 5 million for exemption per married person? If for example: I give away 1 million to my son over 20 years would this be against my 5 million exemption? Is it legal to give a child equity in a property as a gift which is accompanied by monthly cash flow? We are planning to move to Florida for retirement tax purposes.
Any estate planning attorneys in the house?
Rental Property Investor · Southport, CT · Member since 2008 · 160 posts · 137 votes
13y
@William Bannister This area is so complex that you shouldn't take any action without reviewing it with a CPA and/or estate attorney. I'm neither, but having investigated this same topic recently, I can at least give you a couple of clues.
I believe the federal gift tax and estate tax are now unified, so gifts during your lifetime do eat into your estate tax allowance. A possible additional "gotcha" however is your state's estate tax. The limit there may be less than the federal, and gifts during your lifetime may or may not eat into the state allowance. Every state is different, so even if you have no federal estate tax you could have one with your state.
Another consideration when gifting an interest in real estate is the question of basis. My understanding is that a gift of such interest carries its current basis, but if that interest is inherited then the recipient has a basis that is "stepped up" to the value at the time inherited -- a benefit to the heir.
I haven't really given you any usable answers, but i hope I've suggested some questions you should investigate with your accountant or lawyer.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
13y
William Bannister,
As Frank Gallinelli said it is difficult to give a strategy without knowing or talking details.
The estate tax exemption is 5.25 million per spouse; however, the surviving spouse is entitled to use whatever was remaining of the first spouse's exemption. So you can use a total of 10.5 million to shelter assets.
That said you can also utilize gift giving during your life. Gifts under 14k do not count again your gift limits.
Commercial Landlord · Oshkosh, WI · Member since 2013 · 299 posts · 88 votes
13y
I actually did some arm chair QB ing on this subject matter just reading some on my own and see how numbers on these issues are changing yearly. I called the CPA that handles one of my apt buildings we are going to sit down and talk about it next time I fly down to Texas. Hard to believe how fast life moves along my boy is growing so fast.