Being audited by the Internal Revenue Service (IRS) is a lot like having your math teacher from high school tell you to prove that you’ve come up with the right answer on a test. If you can’t prove it, you fail. Sadly, many taxpayers who […]
You still can’t believe that the Internal Revenue Service (IRS) has decided to audit your tax return. In addition to feeling nervous about the outcome of the audit, you feel confused about what the audit process actually entails. The most recent blog, Part 1 of […]
You’ve always had your son’s best interest at heart, which is why you stashed away extra money in his savings account and college fund when he was a little boy. And it’s why you can’t wait to gift him with your home in the future by transferring your home’s deed to him. Not so fast, though. Transferring the deed to the house may actually cause more harm than good, as this move comes with major tax consequences, according to TaxAudit, which has earned multiple positive audit defense reviews. Here are a couple of tax consequences you need to be aware of before making a deed transfer.
For starters, based on tax audit reviews, your son might end up owing the Internal Revenue Service (IRS) large sums of money. Why? Because he might have to pay hefty capital gains taxes because he will not receive a stepped up basis. Perhaps you bought your house for $70,000 years ago. Then, you added $40,000 in improvements to the home, for a total basis of $110,000. ,=When you die the house is appraised at $310,000. Your son sells the house for this price, and he determines that his selling expenses totaled $25,000. In this situation, he will have to pay tax on $175,000.
Second, let’s say that your estate’s value and your total gift amount, including the value of the home you give your son, end up being higher than around $11.2 million over the course of your lifetime. In this situation, you must pay taxes on the transfer of your home’s deed to your son.
The best way to protect your son from tax consequences if you want to give him your house down the road is to place this asset in a living trust. You could also use a revocable transfer-on-death deed to name your son as the person who will receive the home’s deed when you pass, according to today’s top tax experts.
You may think that your small business is not at risk from a cyber attack and this is completely understandable, after all it seems to be the bigger companies show are more at risk. Unfortunately, however it is wrong to think like this as these […]
I am very honored to say that the brilliant and highly respected Dr. Richard Soper is a very dear friend of mine and I have had the pleasure of working with him on a number of occasions. Whenever I speak to people about Richard they […]