{"id":1503,"date":"2024-01-22T12:52:10","date_gmt":"2024-01-22T12:52:10","guid":{"rendered":"https:\/\/www.usataxhelp.com\/en\/?p=1503"},"modified":"2024-01-22T12:52:14","modified_gmt":"2024-01-22T12:52:14","slug":"a-word-of-caution-on-property-transfers","status":"publish","type":"post","link":"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/a-word-of-caution-on-property-transfers\/","title":{"rendered":"A word of caution on property transfers\u2026.."},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s say you gave someone $600k of property at today\u2019s market value.&nbsp; It has been owned along time and only $30k is the original purchase price.&nbsp; We can add improvements to the original $30k say a pool, additional room,\u2026. Add those improvements of $40k to the $30k and we have what we call&nbsp;<strong>BASIS<\/strong>&nbsp;of $70k.&nbsp; That is what the giver of the gift is transferring to the receiver of the gift.&nbsp; If the property is later sold the Income tax calculation starts with a basis of $70k.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If it is a&nbsp;<strong>gift<\/strong>&nbsp;the receiver takes the gift into their inventory of stuff at the&nbsp;<strong>giver\u2019s basis $70k<\/strong>.&nbsp; Now lets say the property is sold sometime later for $620k.&nbsp; The long term capital gain is $620k &#8211; $70k = $550k (to keep it simple let\u2019s ignore the $250k exclusion if this property is a single individual\u2019s that has lived in it 2 of the last 5 years ($500k if married filing joint).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That is a lot to pay.&nbsp; If the property is NOT GIFTED but instead the receiver of the property&nbsp;<strong>INHERITS&nbsp;<\/strong>the property, the receiver then takes it in their inventory of stuff&nbsp;<strong>at the date of death value<\/strong>\u2026..<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">IF it was worth $600k at the date of death\u2026 and sold later for $620k, the BASIS is now $600k for a gain of only $20k.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Let\u2019s say you gave someone $600k of property at today\u2019s market value.&nbsp; It has been owned along time and only $30k is the original purchase price.&nbsp; We can add improvements to the original $30k say a pool, additional room,\u2026. Add those improvements of $40k to the $30k and we have what we call&nbsp;BASIS&nbsp;of $70k.&nbsp; That [&#8230;]<\/p>\n<p><a class=\"understrap-read-more-link\" href=\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/a-word-of-caution-on-property-transfers\/\">Read More&#8230;<span class=\"screen-reader-text\"> from A word of caution on property transfers\u2026..<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,12,15,16,17,1],"tags":[],"class_list":["post-1503","post","type-post","status-publish","format-standard","hentry","category-general","category-income-tax","category-30-newsletter-topics","category-payroll-tax","category-retirement-accounts","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.10 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A word of caution on property transfers\u2026.. - USA Tax Help<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/a-word-of-caution-on-property-transfers\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A word of caution on property transfers\u2026.. - USA Tax Help\" \/>\n<meta property=\"og:description\" content=\"Let\u2019s say you gave someone $600k of property at today\u2019s market value.&nbsp; It has been owned along time and only $30k is the original purchase price.&nbsp; We can add improvements to the original $30k say a pool, additional room,\u2026. 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