I am adding my fiance to the deed on my home and wanted to see if there will be tax implications since we are not married yet.

[userklapel]

I had read something about a gift tax, and I wanted to find out if that would apply for this tax year, or if it would be an issue when we sell.  From what I have read, it seems that those taxes can be pretty hefty.

[Mike9241]

technically you have made a gift to your fiance. if the value is more than $15,000 a gift tax return form 709 is required. Turbotax does not do the form.   if you had waited until after you were married no 709 would have been required. there are no income tax implications unless you sell and she hasn't lived there for any 2 years in the 5 years before sale.

[Anonymous_]

---

@userklapel wrote:
.........From what I have read, it seems that those taxes can be pretty hefty.

---

You would not owe any gift tax to the IRS unless you exceeded your lifetime exclusion amount ($11,700,000 in 2021).

See https://www.irs.gov/instructions/i709#en_US_2021_publink16784xd0e197

[userklapel]

I'm not sure what that means.  How do you determine the gift amount?  We were going to do joint tenants with right of survivorship, so I assume that is 50/50 of the cost of the house?

[userklapel]

Are we better off waiting until we are married?  Who is responsible for the taxes, me or her, and how much?

[Mike9241]

as joint owners (nothin specified as to ownership interest on deed) 50/50 is appropriate.

[Anonymous_]

---

@userklapel wrote:

Are we better off waiting until we are married?  

---

Most likely, you would be better off since gifts between spouses are generally tax-free and do not have to be reported.

Regardless, you will not incur gift tax unless you exceed your lifetime exclusion amount.

[userklapel]

How do you determine the lifetime exclusion amount?  What is it based on?  I want to figure out if this would qualify (it would be my first gift).

[Anonymous_]

For the calendar year 2021, the exclusion amount is $11,700,000.

[Carl]

The IRS will consider that to be a gift, since you are not married yet. Basically, you're gifting 50% of your property. If the value is more than $15,000 then you are required to file IRS Form 709 - Gift Tax Return to report the value of the gift. If the value is less than $11.7M then no tax will be assessed.  But you still have to report it.

In my opinion (and we know what opinions are like) you'd be better off waiting until after you are legally married. Then no reporting of a gift to the spouse has to be reported at all.

[Hal_Al]

"Gift Tax" is somewhat of a misnomer.  Even though a gift tax return may be required, very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/...  

[Hal_Al]

@Carl @Anonymous_ @Mike9241 

When you put someone on the deed of your house, with a mortgage, how much is the gift? Is it half the value of the house or is it half the value of the equity?

This reference seems to say half the equity, unless the mortgage remains solely with the owner. https://conversations.wf.com/gifting_equity_home/

"A $1 million house with a $300,000 mortgage, for example, is considered a gift of just $700,000.

To give the house but keep the mortgage, the parents need permission from the mortgage lender. (And, in the previous example, the value of the gift is $1 million if the mortgage stays with the parents.)"

[Anonymous_]

---

@Hal_Al wrote:

When you put someone on the deed of your house, with a mortgage, how much is the gift? Is it half the value of the house or is it half the value of the equity?

---

As to the donor reporting the gift on Form 709, the value of the gift would be one-half of the value of the donor's equity in the property.

[Mike9241]

A $1 million house with a $300,000 mortgage, for example, is considered a gift of just $700,000. To give the house but keep the mortgage, the parents need permission from the mortgage lender. (And, in the previous example, A $1 million house with a $300,000 mortgage, for example, is considered a gift of just $700,000. To give the house but keep the mortgage, the parents need permission from the mortgage lender. (And, in the previous example, the value of the gift is $1 million if the mortgage stays with the parents.)

so if she is not on the mortgage the value of the gift would be 1/2 the FMV of the house excluding the mortgage.

[userklapel]

What about capital gains when we decide to sell?  We don't plan to sell for another 10 years or so, but I don't want a surprise when we do.  The gift shouldn't be an issue, I don't see myself exceeding the lifetime maximum.