When property is transferred and the transferor does not receive full value in return, a gift has occurred. There are two exclusion amounts. Gifts in excess of the annual exclusion amount require filing a gift tax return. The annual exclusion amount allows for gifts to an unlimited number of individuals of up to $14,000 per year.16 Gifts over a year’s time to any individual that exceed $14,000 must be reported to the IRS. This means that, over a person’s lifetime, he or she may make an unlimited number of gifts that do not exceed the $14,000 per year annual exclusion. This amount is periodically adjusted for inflation. Gift taxes will not be due until the lifetime exclusion amount is exceeded. The lifetime exclusion for gift and estate taxes is currently $5.49 million. For all amounts in excess of the annual exclusion amount, there will be no gift taxes due until the taxable total exceeds $5.49 over the donor’s lifetime. The lifetime exclusion amount is available only to U.S. citizens and permanent residents. The gift tax rate is the same as the estate tax rate, which is 40 percent. If the original owner retains a life estate in the real property, or some other retained interest, it is likely that a completed gift has not been made.17 It is possible that all or a portion of the value of the real estate will be included in the original owner’s gross estate for estate tax purposes. While gifts to a spouse who is a U.S. citizen are subject to a marital deduction, the rules involving pre-1977 transfers for gifts between spouses and gifts between one spouse and another who is not a U.S. citizen each have different rules that can affect the outcome.18
Gift Tax Consequences
When property is transferred, and the transferor does not receive full value in return. If the grantor receives no money for the property a gift tax is imposed.
When has a gift occurred?
If the original owner retains a life estate in the real property, or some other retained interest.
When is it likely that a gift has not occurred?
It is based on homes’ fair market values.
What is a gift tax based on?
When the gift is in excess of the annual exclusion amount. This annual exclusion amount allows for gifts to unlimited number of individuals of up to $14,000 per year. Gifts over a year’s time to any individual that exceed $14,000 must be reported to the IRS.
When is filing a gift tax return necessary?
In Florida there is no state gift tax; however, there is federal gift tax
What is an Exemption to a QCD?
The person or entity making the gift (grantor or donor) is responsible for paying the federal gift tax; however, if the donor does not pay the gift tax, the done (grantee) will be held liable.
Who is responsible for paying the federal gift tax in a QCD?
If you decide to put your children on a Quitclaim deed, you’ll have to file a gift tax return
How much are you able to give as a gift before you have to tax it?
How does putting your children on a QCD affect gift taxes?