Comments on: Ask the taxgirl: “Buying” the family home at discount

By: bethmcauley

bethmcauley — Tue, 18 Oct 2011 00:32:07 +0000

I have a question regarding my brother in law. His mother recently passed on and left him and his two brothers her home. My brother in law wants to buy out the two other brothers. What type of taxes would they have to pay if any ? This home is located in Brooklyn NY 11222.

By: Kelly

Kelly — Mon, 24 Nov 2008 22:15:47 +0000

Shannon,

You’re right. Gift tax can be complicated, especially now that the federal estate and gift tax system is bifurcated, which is why I didn’t mention the exemption. If there’s a gift tax issue, I highly recommend consulting with an attorney!

By: Shannon

Shannon — Mon, 24 Nov 2008 21:29:18 +0000

Taxgirl failed to mention the lifetime gift exemption. You can give up to $1,000,000 in gifts that exceed the annual limit, total, in your lifetime, before you start owing the gift tax. If you give $15,000 each to ten people in one year, for example, you’d use up $30,000 of your $1 million lifetime tax-free limit—ten times the $3,000 by which your $15,000 gifts exceeds the $12,000 per-person annual gift free amount.

I don’t know if this helps or not…

By: Ask the taxgirl: “Buying” the family home at discount | taxgirl | extensiveproperty.com

Thu, 20 Nov 2008 08:53:59 +0000

[...] See original here [...]

By: Kelly

Kelly — Thu, 20 Nov 2008 00:13:18 +0000

Nom Deplume,

Thanks for the suggestions. As you noted, there are a bunch of options that might be better than an outright discount sale but there really aren’t enough facts here to make a solid recommendation – for example, a periodic sale won’t get you much if the father’s health is poor (especially if there are siblings!). Lots to consider! That’s why the best advice is to consult a pro on this one.

By: Nom Deplume, J.D., LL.M.

Nom Deplume, J.D., LL.M. — Wed, 19 Nov 2008 23:30:53 +0000

Boy, you are nicer than I would have been (although I wouldn’t have “maule-ed” anyone.)

I am surprised that you did not suggest an installment sale with periodic forgiveness of each year’s installment. Or whether a sale of the future estate would lower the FMV. Or a combination of both.