Calculating The Cost Basis Of A Long Time Family Property
Calculating The Cost Basis Of A Long-Time Family Property Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
My father bought a house many years ago that is fully paid off. He now wants to gift it to me. What are some of the tax consequences and other considerations we should think about?
— Hugh
Because your father inherited the property, the general rule for you to use is the fair market value, or FMV, of the property on the date of your grandfather’s death. However, as is usually the case with the IRS, there are exceptions to the general rule and you need to be aware of them in case any of them apply to your situation. The exceptions could come in to play in the following situations where Form 706, United States Estate Tax Return, was filed with the IRS: If the executor of the estate or the personal representative chose to use the “alternate valuation date,” then you would use the FMV on that date, which is six months after your father’s death. For estate tax purposes, there are special-use valuation rules if this property is a farm or closely held business. I will not go in to the details at this time but just wanted to point it out as one of the exceptions. There are special rules if the property was considered a “qualified conservation easement” and the value was adjusted on the estate tax return. The estate tax is really a tax on the right to transfer property at your death. Most estates are not required to file an estate tax return. For 2017, they are required when the combined gross estate and prior taxable gifts combined amount to more than $5.49 million. One final note to you is that you will need to increase your basis by any capital improvements made by you once you received the property from your father. The sales price of the property minus your cost basis determines the amount that will be subject to capital gains tax. Please do not hesitate to consider sitting down with a qualified tax professional to help you with this very important calculation. It will be worth your time. Thanks for the great question and all the best to you! If you need a place to park your cash, .
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: March 21, 2017 Judy O'Connor Bankrate logoThe Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logoThe Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logoEditorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logoHow we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.My father bought a house many years ago that is fully paid off. He now wants to gift it to me. What are some of the tax consequences and other considerations we should think about?
— Hugh
Because your father inherited the property, the general rule for you to use is the fair market value, or FMV, of the property on the date of your grandfather’s death. However, as is usually the case with the IRS, there are exceptions to the general rule and you need to be aware of them in case any of them apply to your situation. The exceptions could come in to play in the following situations where Form 706, United States Estate Tax Return, was filed with the IRS: If the executor of the estate or the personal representative chose to use the “alternate valuation date,” then you would use the FMV on that date, which is six months after your father’s death. For estate tax purposes, there are special-use valuation rules if this property is a farm or closely held business. I will not go in to the details at this time but just wanted to point it out as one of the exceptions. There are special rules if the property was considered a “qualified conservation easement” and the value was adjusted on the estate tax return. The estate tax is really a tax on the right to transfer property at your death. Most estates are not required to file an estate tax return. For 2017, they are required when the combined gross estate and prior taxable gifts combined amount to more than $5.49 million. One final note to you is that you will need to increase your basis by any capital improvements made by you once you received the property from your father. The sales price of the property minus your cost basis determines the amount that will be subject to capital gains tax. Please do not hesitate to consider sitting down with a qualified tax professional to help you with this very important calculation. It will be worth your time. Thanks for the great question and all the best to you! If you need a place to park your cash, .