I want to give a house to my brother as a gift, what kind of tax consequence would that be?

Question

Basically I want to know what kind of tax situation we are looking at and is there any way to avoid that?

Answer 1

There should not be any tax involved, if you give a house to your brother. A transaction for love and affection is tax exempted  

Answer 2

There can be significant tax consequences to both of you, depending upon the numbers.

If the home is worth more than $12k you'll have to file a Gift Tax return.  No tax will be due unless or until you exhaust your $1 million lifetime exclusion however that exclusion is tied to your Estate Tax exclusion and reduces it dollar-for-dollar.  That can have significant impact when you die depending upon the size of your estate even if no tax is currently due.

Your brother will receive your pass-through basis in the home.  This means that he may be facing a significant tax bill when he eventually sells the home.  There are ways to avoid or minimize that tax bite but they are not automatic and if he were to sell the home immediately the tax bill could be huge.

Giving away a home is usually a poor choice tax-wise both in the present and in the future.  There are ways to minimize the damage though.  One option would be to place the home in a trust with him as the beneficiary.  That would avoid probate and simplify the transfer to him when you die and would give him the stepped up basis upon your death and bypass the Gift Tax monster entirely.  Another option would be to grant him a Live Estate giving him the right to live in the home for his lifetime yet pass it to someone else upon his (and your) death.

You should consult with a qualified estate planner before proceeding.

Answer 3

gee whizz what a generous tax system!!

Answer 4

The person who receives a gift does not pay any gift tax.

The donor (that is you) must file gift tax return if the gift to a single person in a year is more than $12,000. You may not have any gift tax as there is a life time exclusion of $1 million.

Read http://taxipay.blogspot.com/2008/03/us-g...