10 May Mom left us her home. Can we transfer our shares to one sibling?

Q. Mom passed and her five children inherited her house. Four of the five want to gift their shares in the house to the fifth sibling. What is the best way to transfer without paying fees, taxes?
— Beneficiary

A. We’re sorry to hear about your mom.

There are several considerations for you and your siblings.

First, anyone can gift up to $18,000 in 2024 to another person under the annual gift exclusion rules before needing to file a gift tax return, said Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette.

A married couple can also make what is called a split gift by filing a gift tax return (Form 709) allowing them to gift $36,000 for 2024, he said.

“To use the gift splitting strategy each spouse must be a U.S. citizen or resident,” he said. “They also need to file Form 709 to provide their consent to split gifts.”

Maye said it’s likely that each sibling making the gift will need to file a gift tax return to the extent their 20% stake of the inherited home is greater than the annual gift exclusion amount of $18,000, assuming no gift splitting strategy.

If the gift exceeds $18,000, the amount above that level gets reported on the Form 709 and reduces their federal estate exclusion, which is currently $13.61 million per person, Maye said.

“No gift taxes would be due by a sibling making a gift unless they have already used up their federal estate exemption, which is not typical,” Maye said. “Even if a sibling is gift splitting with their U.S. citizen or resident spouse and the gift equals $36,000, they would still need to file the 709 to report the split gift.”

But this can get complicated, Maye noted, depending on the specific finances and tax situations to each sibling. For that reason, consider speaking to a certified public accountant or an estate attorney who can address the specifics of your family’s situation and make sure any transfer of the home is done properly.

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This story was originally published in May 2024.

NJMoneyHelp.com 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.