Gift equity would do both? Taxes?

P

polkarocks

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Jurisdiction
California
My mom wants to give me cash & land worth $30k & was advised a gift equity would do both. How does this gift/loan work & what taxes need I consider?

What to understand what happens to the property taxes. Do they go up?

Is there capital gains/basis points involved? Heard about these but not clear if they involve just land or a certain dollar amount etc. Thank you.
 
There are two issues: income tax and property tax.

Income tax: Neither the giver or the receiver pay tax on small gifts but giver may have to fill out a gift tax return at the end of the year if the gift is over $14000 and would only have to pay taxes on gifts if a lifetime of giving totaled well over $5,000,000. Any number of individuals can give $14000 each to any number of individuals without filling out a gift tax return.

Example: If your Mom and Dad gave you $28,000 or if your Mom and Dad gave you and your wife $56,000.

More on gift tax at the IRS:

Frequently Asked Questions on Gift Taxes

The land's FMV (Fair Market Value) would have to be determined either by appraisal or informally if it can be documented.

With regard to Capital Gains tax, when you sell the land you will pay tax on the difference between the sales price and what your Mom originally paid for the property, not the FMV at the time of the gift. There may be adjustments to that gain due to sale expenses and other items. You can poke around the IRS website and find a topic about that.

As for property tax, a transfer from parent to child does not trigger a reassessment up to a certain limit. The property you're talking about would certainly be within that limit.

Google "parent to child transfer property tax" and the name of the county. Every county tax website should tell you that.
 
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