Estate Gift

Forum|Forum|1 year ago
March 23, 2025
1 reply
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Premise:

My wife and I own a condo. If we donate (this year) to our daughter a portion of the condo value (up to $ 36,000) since we are Married Filing Jointly) and then we continue with this gift for the next 5 years (approximately $180,000).

Question:

What impact (on us or our daughter) does the 5 years donation will have in future taxes if eventually we donate the condo to our daugther?

Thanks in advance for your response.

Leslie R. Quiros

TurboTax Basic Windows

pk12_2

Employee

@quiroslr52 , while this is not really a tax preparation / filing question, , IMHO the answer depends on your aim.

(a) a gift carries with it the basis of the donor. Thus if the adjusted basis of the property to you ( Acquisition cost PLUS cost of all improvements during holding period LESS accumulated allowable depreciation during rental / income generation period ) $100,000 then your daughter's ( donee ) basis would be 100,000. So if downstream she disposes off the property her gain and taxation thereon is based on the basis of $100,000. No matter what the FMV . So it could be tax hit

(b) if on the other hand she gets it by inheritance , then the basis is with a step up to FMV ( 1/2 or full depending on the state ). And hence her capital gain and tax thereon is likely zero.

(c) If what you are doing is trying to regenerate the depreciation basis -- you have depreciated down to zero depreciation, and want to refresh by transferring, gifting won't do it. She will have to purchase it i.e. create a new basis.

That is my two cents.