Rentals in Cornelius>Question Details

Bike, Home Seller in Cornelius, NC

If I give a fully depreciated rental home to my son, what are the tax ramifications for him and for me/

Asked by Bike, Cornelius, NC Wed Oct 13, 2010

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Hi Bike,
I would call Ladd, McCall & Associates, Certified Public Accountants, PA. They are great to work with.
(704) 896-2870
17322 W Catawba Ave
Cornelius, NC 28031-5678

Kindest Regards,

Jeff Monfils
Director North Carolina Operations
BIC / CFA / CSSA
704.975.7616
Bastille Real Estate
3611 Mt Holly-Huntersville RD Ste 204-310
Charlotte NC 28216
http://www.BastilleRealEstate.com
jmonfils@BastilleRealEstate.com
Philippians 2:3&4
2 votes Thank Flag Link Wed Oct 13, 2010
Though it seems like it's a perfectly easy thing to do, you definitely need the advice of a real estate/tax attorney and CPA, because it's really a good bit more complicated and you don't want to negatively effect your tax base nor your son's. You have enjoyed the tax benefits of this home, and typically I'd advise a client to do a 1031 exchange at this point to keep their tax benefits going. The IRS typically requires an "arm's length" transaction, which means you can't "sell" it to a member of your immediate family. If you want to dissolve your tax shelter benefits now and don't want to deal with this or any other property in the future, your attorney/CPA will be able to advise both you and your son as to what you can do now to prevent issues down the line with the IRS. Those benefits travel with you, not the property. That's how 1031 exchanges help when you're dealing with investments and the tax shelters they provide. You may also "gift" your children a certain amount each year without the typical tax issues and this is also something your tax attorney/and CPA can discuss with you. Good luck and don't take a step without talking with a professional in your area.
0 votes Thank Flag Link Thu Oct 21, 2010
I would suggest asking a Tax Attorney this question or at least asking a CPA that specializes in this field.
0 votes Thank Flag Link Wed Oct 13, 2010
I would suggest asking this same question with a Financial Planner or Tax Adviser. I am not sure a community of Realtors is the right place to get advice for this question. Want to know what your home could sell for, fire away! We got the answer!
0 votes Thank Flag Link Wed Oct 13, 2010
Bike -

I believe he will have to take the hit when he sells.

His basis in the property will be zero - instead of the current market value.

He will have to pay the piper when he sells.

There may be a way to transfer the property as part of your estate when you pass. Check with a good estate planner to see what the best and least expensive way (taxwise) would be to structure the transfer.

Good Luck!

If you like the answer - please consider making it a "Best Answer" !

Gerard Dunn
Associate Broker
Licensed in Maryland, Virginia and Washington, D.C.

Assisting Homebuyer's and Seller's for 28 years
703-216-9100
0 votes Thank Flag Link Wed Oct 13, 2010
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