I own a house. I sell it to my mom for a buck. Will the taxes on this home be based on comps, the sales price or something else? Thanks.
Real Estate taxes are usual based on an assessment performed by an official county/city assessor. An assessment is basically a form of appraisal. Therefore, the sales price shouldn’t effect the tax burden on the home.
If you are referring to income taxes on a subsequent sale, her basis will not be $1 since it is not considered an arms length transaction. If you are talking real estate taxes, that is not based on sales prices, but an assessed value from a governmental employee. Either way, the sales price will have nothing to do with actual taxes assessed or paid.
ask your accountant for sure, but you need to have determined fair market value (usually done through an assessment or sales price, whichever is higher) in determining your capital gains tax.
also, they will use a similar approach in determining the amount of tax that is owed by the recipient. You can not just “gift” a house or large sum of money (I think the max is 5 or 10 grand) without Uncle Sam having his grubby hand out.
got to love taxes!
ask your accountant for sure, but you need to have determined fair market value (usually done through an assessment or sales price, whichever is higher) in determining your capital gains tax.
also, they will use a similar approach in determining the amount of tax that is owed by the recipient. You can not just “gift” a house or large sum of money (I think the max is 5 or 10 grand) without Uncle Sam having his grubby hand out.
got to love taxes!
The annual gift tax exclusion is 13k for 2009. If you are married, you and your wife can gift 26k. If you are gifting to a mom and dad, then it can be 52k.
The difference between the FMV of the house and the $1 sales price may be considered a gift. So you would be stuck filing a gift tax return. It may not cause you to pay gift tax though unless