Tax Aspects of Gifting a Home: Basis, Part-Sale Part-Gift Transfers, Installment Notes, and CA Proposition 19

Giving away the family home is a commonly broached topic by all taxpayers, not just those subject to the gift tax. It may also be the most common transfer that takes place without the tax adviser knowing. Addressing the situation correctly, and hopefully upfront, can avoid paying excess tax to the IRS and aid taxpayers in transferring an invaluable asset to a family member.

There are a multitude of considerations surrounding gifting and the subsequent sale of a home. These questions covered at the time of transfer include whether to gift the property, sell the property to a family member, or perhaps set up a part-sale part-gift transaction. If a sale is part of the deal, not only is minimizing capital gains tax a key consideration but also avoiding disallowed losses under gifting rules. Additionally, the parent may choose to remain in the gifted property, or the child may move in before it is transferred, creating new tax conundrums.

Holding the property until death would provide a basis step-up, but there are times when gifting a home to a family member is the best alternative. In these situations, the tax adviser needs to structure the transaction in the best interest of both the related parties.

Listen as Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP at Pon & Associates, walks you through the numerous considerations of transferring a home to a related party, including tips to minimize capital gains, methods of transfer, installment sales and installment notes, and non-tax considerations when gifting this primary asset.

1. Basis
2. Capital gains
3. Part-sale part-gift transfers
4. Installment sales and installment notes
5. Gift tax
6. California Proposition 19
7. Biden tax plan

The panelist will cover these and other critical issues:

• How should the parties document the transfer?
• When should a part-sale and part-gift transaction be considered?
• How is the sale of the home taxed after it is gifted?
• How to determine the fair market value of the family home
• When should the house not be gifted?

Learning Objectives

After completing this course, you will be able to:

• Determine how a home is taxed for federal tax purposes when gifted
• Ascertain the tax consequences of a part sale and part gift transaction
• Understand the tax ramifications of installment sales and installment notes
• Ascertain that gift tax requirements are complied with and correctly reported
• Establish the impact of gifting a home on estate taxes
• Identify situations when the family home should not be gifted

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).