My parents just deeded their home to me for $1.00. Do I still qualify to be gifted the 2008 $12,000.00 amount without being gift taxed?

1 answer | Last updated: Nov 26, 2016
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My parents just deeded their home to me for $1.00. Do I still qualify to be gifted the 2008 $12,000.00 amount without being gift taxed?


Expert Answers

Steve Weisman hosts the nationally syndicated radio show A Touch of Grey, heard on more than 50 stations, including WABC in New York City and KRLA in Los Angeles. He is a practicing lawyer specializing in estate planning and is admitted to practice before the United States Supreme Court. He's a public speaker and commentator who has appeared on many radio and television shows throughout the country, and he's the legal editor of Talkers magazine, the preeminent trade publication of talk radio. His latest book is The Truth About Avoiding Scams.

The gift tax rules are very much misunderstood by many people. You, as the person who receives a gift, aren't required to pay a gift tax. The gift tax is always assessed to the giver.

When your parents transferred their home to you for a dollar, they made a gift to you of the value of the property -- which is obviously greater than the single dollar sales figure. For instance, if the home was worth $300,000 and it was sold to you for a dollar, they made a gift to you of $299,999. However, this doesn't automatically mean that they will owe a gift tax on the transfer.

Everyone has the right to make unlimited gifts during a calendar year in the amount of $12,000 per person to as many people as they wish without having to either pay a gift tax or even file a federal gift tax return. However, over and above this amount, everyone also has a lifetime one million dollar lifetime exemption from gift taxes. Therefore, your parents could transfer the home to you for a dollar and use their lifetime gift tax exemptions that they both have to avoid having to pay any gift tax. They would, however, be required to file a federal gift tax return that would indicate their use of a portion of their lifetime exemptions to cover the gift tax that would otherwise be due.