Discussion:Gift tax question on Real Estate purchase
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| 25 April 2007 | |
| Grandson -- with money but -0- credit -- purchased a rental property and obtained a mortgage by having Grandparents names on the deed. Grandson has since been 100% responsible for all economic investment, tenant agreements, etc, etc. He has also received all rental income.
Two years later, grandparents removed their names from the deed, thereby giving their interest in the property to the grandson. Grandson alone is listed on the deed as owner. Question: Are grandparents liable for gift tax? Is the grandson? Jim F | |
| 25 April 2007 | |
| No and No. I see this as beneficial ownership of the grandparents half by the grandson. | |
| 25 April 2007 | |
| Solomon, thank you very much
I searched, found, and read the link you provided before I posted the question, so I grasped the issue as it relates to mortgage payments, interest expense, etc....but still wasn't clear as it related to gift tax. Now I know! Appreciate your clarification and help. Jim F | |
| 25 April 2007 | |
| Yes, this is clearly a transfer of a beneficial interest in property to the grandson. Previously, grandson was merely a titleholder without the benefits and burdens of property ownership. Presumably, he now has those benefits and burdens of ownership. File the gift tax returns. | |
| 25 April 2007 | |
| I would think the decision depends on agreement between parties. If the mortgage was non-recourse to grandson the rental should have been filed as a partnership and there is a gift of grandparents' partnership interest. | |
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