Do my children owe tax if I gift houses to them?


Q. I would like to give a house to my son and another house to my daughter. Do my children have to pay tax for the gifts?
— Mom

A. Those are some generous gifts.

We’re guessing you’re making these gifts as part of your estate plan. Before you do it, we want to make sure you meet with an estate planning attorney who can look over your entire financial situation to ensure this move is the right one for you.

To transfer the houses to your children, you will need to establish the property’s fair market value, said Martin Hauptman, partner in the trust and estates and tax law practice groups at Mandelbaum Barrett, P.C. in Roseland.

The fair market value will have to be reflected as a gift on Form 709, he said.

The annual exclusion per recipient is $16,000 in 2022, he said. To the extent that the value exceeds $16,000, you will use a portion of your lifetime exclusion, currently $12.06 million, he said.

“You will need to prepare a deed conveying the property to your children and related forms that will be filed with the court in which the real estate is located,” Hauptman said. “Your children’s basis in each house will be your original cost basis plus improvements, not the fair market value at the time of the gift.”

Your children will pay no tax on the receipt of the house, he said.

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This story was originally published on Dec. 12, 2022. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.