Tax Aspects of Gifting a Home: Basis, Part-Sale Part-Gift Transfers, Installment Notes, and CA Proposition 19

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, February 2, 2021

Recorded event now available

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Program Materials

This webinar will explain the caveats and considerations of giving away the family home from the initial transfer to the final sale. The panelist of tax experts will discuss methods of transfer, capital gains issues, installment notes, related party rents, and how to devise the best tax outcomes for both the donor and donee.

Description

Giving away the family home is a commonly broached topic by all taxpayers, not just those subject to the gift tax. It may also be the most common transfer that takes place without the tax adviser knowing. Addressing the situation correctly, and hopefully upfront, can avoid paying excess tax to the IRS and aid taxpayers in transferring an invaluable asset to a family member.

There are a multitude of considerations surrounding gifting and the subsequent sale of a home. These questions covered at the time of transfer include whether to gift the property, sell the property to a family member, or perhaps set up a part-sale part-gift transaction. If a sale is part of the deal, not only is minimizing capital gains tax a key consideration but also avoiding disallowed losses under gifting rules. Additionally, the parent may choose to remain in the gifted property, or the child may move in before it is transferred, creating new tax conundrums.

Holding the property until death would provide a basis step-up, but there are times when gifting a home to a family member is the best alternative. In these situations, the tax adviser needs to structure the transaction in the best interest of both the related parties.

Listen as Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP at Pon & Associates, walks you through the numerous considerations of transferring a home to a related party, including tips to minimize capital gains, methods of transfer, installment sales and installment notes, and non-tax considerations when gifting this primary asset.

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Outline

  1. Basis
  2. Capital gains
  3. Part-sale part-gift transfers
  4. Installment sales and installment notes
  5. Gift tax
  6. California Proposition 19
  7. Biden tax plan

Benefits

The panelist will cover these and other critical issues:

  • How should the parties document the transfer?
  • When should a part-sale and part-gift transaction be considered?
  • How is the sale of the home taxed after it is gifted?
  • How to determine the fair market value of the family home
  • When should the house not be gifted?

Faculty

Pon, Lawrence
Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP

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Pon & Associates

Mr. Pon has been in practice since 1986 providing comprehensive tax and financial planning, tax preparation and...  |  Read More

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