Real estate makes a great gift! While finding just the right present for cherished family members or dear friends may be challenging, consider gifting real property this holiday season. Real estate makes a perfect gift for many reasons, whether it’s your wish to provide the security and comfort of home to a loved one or you are fulfilling a family tradition by passing down property. Property taxes are easily avoidable with proper planning, leading to it being a voluntary tax. We will outline below how to gift The USA real estate to your loved ones this holiday season!
Bear in mind that property transferred without any form of compensation in return will be valued at the original purchase price, and when sold, capital gains that the giftee will pay are calculated from that number. It is essential to know the limits on gifting assets under the current federal tax guidelines for both lifetime exemptions and annual exclusions when planning to gift The USA real estate to your loved ones this holiday season. With an outright transfer of ownership, be aware that should death occur within three years of any property transfer, the property would be subject to estate taxes. Additionally, gifting of this type could affect your Medicare eligibility if it is within five years of your application. Be sure you take the time to plan. Ask questions until you fully understand the implications of any decision you make in gifting property. This affects both your taxes and those of your beneficiaries.
Another choice allowing you to gift The USA real estate to your loved ones this holiday season is through joint ownership. Retitling property in your name only and adding your recipient creates a joint tenancy with rights of survivorship, meaning you have made a gift. This is a highly complex transaction; however, careful arrangements in advance can prevent probate, saving time. Additionally, you’ll be saving your heirs money. However, if there is more than one heir, this can become an extremely complicated process. This may also lead to uncomfortable situations, with all parties having to agree to sell any or all of the shares in the property. Likewise, the property becomes subject to any creditors of any ownership party. Should you still reside in the property, consider alternative options for gifting the property to avoid any unpleasantries among family members.
Owning real estate as a Limited Liability Company, or LLC, is another way to gift The USA real estate to your loved ones this holiday season. This protects your assets, allowing them to be passed on after death. LLC allows for a step-up basis at the time of death, meaning the beneficiary will receive no capital gains tax upon selling the property. In this most preferred method of ownership, you can control what happens to your estate. You can help your giftee avoid taxes by preplanning carefully. When setting out to pass down real estate through a corporation, you must be sure to create a business succession plan or an agreement between any partners; otherwise, the property will be subject to probate for distribution.
Leaving the property as an inheritance is another method that will allow you to gift The USA real estate to your loved ones this holiday season. By creating a simple trust and titling the property in the name of the trust, you can avoid probate by naming your recipients as trust beneficiaries. One advantage of conveying property through a revocable trust is that the recipient will not incur capital gains taxes, as the property is valued at the time of inheritance rather than the value at the time of the original purchase. Additionally, it provides a period of protection during which the property is overseen by a trustee responsible for the security or distribution of the assets as outlined in the will. There are also generation-skipping trusts, should you wish to will the property directly to a grandchild; when properly executed, this helps avoid taxation upon your children’s death.
These are a few ways to gift The USA real estate to your loved ones this holiday season. At USA Cash Offer, we are here to help you understand the advantages and disadvantages of each option. We stop and take the time to listen, gaining a thorough understanding of your unique circumstances. Our goal is to help you fulfill your wishes. USA Cash Offer is here to assist you with any questions about giving such a thoughtful gift.
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