Question

Gifting to child

Forum|Forum|2 years ago
October 25, 2023
3 replies
0 views

I sold my family property in 2023. I want to split the profit from the sale between my two daughters in 2024.

I understand:

Sale of property - Basis and Expenses= Capita gains basis taxed at 15%

Question: Can I gift this profit to my daughters without paying further IRS tax?

Question: This property is in Indiana. I live in Florida. ( no state tax ) Will I have to pay an Indiana Sales tax?

A

Anonymous_

Employee

You already sold the property so you will be liable for any capital gains tax due as a result.

However, the gift to your daughters will have no income tax consequences.

You may have to file a gift tax return with the IRS (if the gift to each is more than $17,000).

See https://www.irs.gov/instructions/i709#en_US_2022_publink16784xd0e314

O

Opus 17

Employee

You owned the property, you sold the property. The capital gains is income to you and you must pay any capital gains tax on your tax return.

What you do with the money after has no effect on the taxability of the income to you.

If you give a gift of more than $17,000 per person per year to anyone, you must file a form 709 gift tax return. However, actual payment of gift tax is not required unless your lifetime total of all gifts and your estate is more than about $13 million. Form 709 is so the IRS can keep track of your large gifts. Turbotax does not include this form, and it is not attached to your tax return. You would prepare and file it separately. For gifts made in 2024, form 709 would be due April 15, 2025.

Sale of property located in Indiana is considered to be Indiana source income. You will be required to file an Indiana non-resident tax return to report and pay Indiana income tax on your Indiana sourced income. If you also filed tax in your home state, you would report and pay income tax on all your income, and your home state would give an offsetting credit for taxes paid to another state. But since you don't have Florida income tax, you will just file the Indiana NR return and pay tax on the capital gains. Note that when using Turbotax, and you indicate you are a Florida resident and you have Indiana income, you must tell Turbotax how to allocate your income, the program can't assume for you. Make sure you assign the sale of the property to Indiana, but assign all your other income to Florida only.

N

NCPERSON1

@VJH27 you appear tobe asking if the gift is tax deductible, so that it lowers your gain. No, it does not work that way. A gift has no impact on your INCOME tax.

Hal_Al

Employee

"Gift Tax" is somewhat of a misnomer. Even though a gift tax return may be required, very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html