@bk591 wrote:
Would I or my child (son) be liable for any kind of tax, gift tax or another type of tax? To be clear, the property (condo) is worth $247,000 and I am paying cash for it. All $247,000 is my after-tax income, saved over many years. My annual income is approximately $170,000.
Gifts of more than $16,000 must be reported, but gift tax is only owed if the giver's lifetime gifts is more than about $11 million. (The gift must be reported so the IRS can track it against your lifetime limit.) If gift tax was owed, it is owed by the giver, never the recipient.
If the home is purchased with cash, there is no mortgage interest to deduct. To deduct the property tax, the taxpayer must be an owner of the property against whom the tax is obligated, must actually pay the tax, and must itemize deductions on their tax return. I suspect that either you will be paying the tax, or your son will but he won't have enough other income and deductions to itemize, so likely no one can itemize the property tax.
Some of your closing costs are not tax deductible but are allowed as adjustments to the cost basis. If your son owns the home and lives in it as his main home for at least two years, he probably won't pay capital gains tax anyway, when college is over. However, you may want to keep track of those closing costs in case you need to know the cost basis of the home. See page 8 of IRS publication 523.
https://www.irs.gov/forms-pubs/about-publication-523
I can think of very little reason to give the home to your son, instead of owning it and allowing him to live there, except for the capital gains exclusion. There is some risk to giving him the home, teenagers are not known for being incredibly responsible (boy's brains don't finish maturing until about age 25). Buying a home for a child is not quite the same thing as giving him the keys to a high powered car, but it's not risk-free either.
