Dear Celticsblog: Tax question

[Roy Hobbs]

Okay, this doesn't have the appeal of Jsaad's relationship thread, but I have a question for all the tax experts (and non-experts) out there.

My girlfriend's step-mother has offered to buy her a house / condo, let's say around $200,000.  Are there any tax consequences she / we should be aware of?

Any advice would be greatly appreciated, and will be repaid in Tommy Points (which, as far as I know, are still non-taxable.)

[Donoghus]

Whose name is the house going under?

[nickagneta]

Okay, this doesn't have the appeal of Jsaad's relationship thread, but I have a question for all the tax experts (and non-experts) out there.

My girlfriend's step-mother has offered to buy her a house / condo, let's say around $200,000.  Are there any tax consequences she / we should be aware of?

Any advice would be greatly appreciated, and will be repaid in Tommy Points (which, as far as I know, are still non-taxable.)

If the step mom is doing this is she paying cash up front for the whole $200G or is she providing the financing?

If she's giving the daughter the money and the deed is in the daughter's name that's a gift and only the first $10G is tax deductible, I believe.

Now if mom buys the place outright I believe she could then sell the place to her daughter for a dollar with minimal tax implications if the daughter resides there for a certain period of time. I think this might forego cap gains implications if she lives there for so long.

I'm not 100% sure but I know my parents bought my grandmother's place from her while she was alive and it went something like that.

Now the problem arises is if she goes the second route then there are elder law implications regarding whether the mom is hiding assets so for the first five years it might still be considered an asset of the mom if the mom were to need to be permanently hospitalized within that first 5 year timetable.

I think.

[yall hate]

Okay, this doesn't have the appeal of Jsaad's relationship thread, but I have a question for all the tax experts (and non-experts) out there.

My girlfriend's step-mother has offered to buy her a house / condo, let's say around $200,000.  Are there any tax consequences she / we should be aware of?

Any advice would be greatly appreciated, and will be repaid in Tommy Points (which, as far as I know, are still non-taxable.)

On a very basic level, if her step mother is buying the home with her money, but putting the home in your girlfriends name would have tax consequences.  IT would be a gift from step mom to gf.  As such, it shouldnt have tax consequences to gf, but will have consequences to step mom.  she gets the 12k annual exemption, but she would have gift tax consequences of 188k.

There are definitely different ways around this, and ways for mom to acquire the house, and daughter to acquire an interest in it that leads to ownership but for that, I would definitely suggest a local atty who knows the laws of the specific jurisdiction.

[Roy Hobbs]

Whose name is the house going under?

My girlfriend's for the time being.  Eventually, both of ours, but I can handle the transfer aspect of it when the time comes.

[Brickowski]

The per donee exclusion is now $12,000 and will go to $13,000 on 1/1/09, and if her step mother is still married to her father, the exclusion is double ($24,000 or $26,000) since the gift can come from both parents.  I believe the balance will count toward the step mother's $1,000,000 lifetime gift tax exemption, although she may still have to file some form with the IRS.

If the stepmother has already exceeded her lifetime exemption the balance of the $200,000 (the portion above the per donee exclusion amount) would be taxable at 32%.

Caveat: if I recall correctly, the "lifetime" exemption is also a "deathtime" exemption, so if your girlfriend's stepmother eats into her lifetime gift tax exemption before she dies, the ability of her estate to make tax-free bequests will be correspondingly reduced.

Free advice is worth what you pay for it, so check all of the foregoing with a good accountant.
  

[Roy Hobbs]

Free advice is worth what you pay for it, so check all of the foregoing with a good accountant.
  

Absolutely.  I'm afraid to say that this is one area of the law I have no idea about, and if we make this happen, we'll probably go both the attorney and accountant route.

[action781]

The per donee exclusion is now $12,000 and will go to $13,000 on 1/1/09, and if her step mother is still married to her father, the exclusion is double ($24,000 or $26,000) since the gift can come from both parents.  I believe the balance will count toward the step mother's $1,000,000 lifetime gift tax exemption, although she may still have to file some form with the IRS.

If the stepmother has already exceeded her lifetime exemption the balance of the $200,000 (the portion above the per donee exclusion amount) would be taxable at 32%.

Caveat: if I recall correctly, the "lifetime" exemption is also a "deathtime" exemption, so if your girlfriend's stepmother eats into her lifetime gift tax exemption before she dies, the ability of her estate to make tax-free bequests will be correspondingly reduced.

Free advice is worth what you pay for it, so check all of the foregoing with a good accountant.
  

Yes, this sounds mostly correct.  I learned it in Shawshank Redemption