20 Feb Can I avoid tax if I give this home to my kids?

Q. I have had a summer home for a long time, and we rent it out also. But lately I’m thinking I don’t want to deal with it anymore. We have two adult children who also use it, and I thought I would leave it to them someday. Is there a way to gift it or sell it to them without me having big tax issues to worry about?
— Mom

A. There are several considerations here.

It does make a difference whether you sell it or gift it to your children.

The mixed usage of the property, renting and using the summer home, also provides an additional tax wrinkle, which would require input from your accountant, said Jonathan Kukin, chair of the tax, trusts and estate Planning practice at Wells, Jaworski & Liebman, LLP in Paramus.

Also, the total value of all your assets is an important consideration, he said.

On gifting it to your children, summer homes typically are a family’s vacation home and tend to remain in the family, Kukin said.

“This is of great benefit to eliminate the asset from your estate, without concern as to the capital gain consequences,” he said. “Utilizing a portion of your current gift/estate tax exemption — per the Big Beautiful Bill is $15 million — consider gifting the summer home to your children.”

It reduces your estate by the value of the summer home.

However, your children will hold the home at your basis — the purchase price plus capital improvements — and if they sell it in the future, they will have to pay the capital gains tax, he said.

“Subject to the size of your estate, there are techniques to reduce the gift value of the summer home,” he said. “As it is a gift, you no longer have the burden of ownership, and you would not have to pay any capital gains tax, as it was gifted, not sold, to your children.”

If the summer home is sold to your children, you would no longer have the burden of ownership. However, the sale would be subject to a capital gains tax, which equals the sales price minus the purchase price plus capital improvements. This would come out to the amount of capital gain you would be subject to upon the sale, Kukin said.

“As the summer home is likely not your primary residence, you would not be entitled to the capital gain exclusion,” he said.

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This story was originally published in February 2026. 

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