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Question for the Money Doctors

Question submitted on Mar 3, 2011.


My mom is 74, and would like to give each of her 4 children (including me) a gift of a piece of land that she has had for over 40 years. The land is 5 acres valued at $190,000 by the County Appraisal District. She would like to give each of us 1.25 acres valued at $47,500. What is the best way that she can gift this land to us while minimizing the federal gift tax?


<span style="line-height: 115% font-family: "Arial","sans-serif"; font-size: 9.5pt;">With regard to the federal gift tax, your mom can gift to each of her children (or anyone else for that matter) up to $13,000 in 2011 without any gift tax implications (as long as the gifts are a “present interest” which in your case they would be).

<span style="line-height: 115% font-family: "Arial","sans-serif"; font-size: 9.5pt;">Based on your numbers, the first $13,000 of each gift would have no gift tax implications; amounts to each child above that amount would reduce mom’s lifetime gift/estate tax exclsuion amount, which may not be a big deal depending on the size of her estate. In either case, there would be no gift tax due on gifts of this size (unless mom has made significant gifts in the past). If it is important to preserve her lifetime gift tax exemption, she may want to consider making these gifts over a few years in order to have most or all of the gift value come under the $13,000 per year annual exclusion.

<span style="line-height: 115% font-family: "Arial","sans-serif"; font-size: 9.5pt;">Lastly, you may also want to consult an attorney to assist in changing the title of the land to reflect the gifts made.

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