Joint Tenancy and Gift Tax question

[sdsmith1221]

Thank you!

[ftcdcr]

Hi,

Same question.  I bought a townhome last year to be used by my son while he is in college.  It's Joint Tenancy with he and I on the deed.  I paid the down payment and am co-signer on the loan.  I assume I need to fill out form 709 with the amount showing that he is gifted 50%.  When we sell I assume we can do the opposite.

D.R.

[MarilynG]

Since you and your son are Joint Tenants, it would be assumed that each of you contributed 50% to the purchase.

As you paid the down payment in full, yes, the 50% that he would have paid would be a 'gift' to him from you.

Since a Gift Tax Return is filed separately and is not reported on your personal Form 1040, you can download Form 709 from the IRS site and send it in.  It doesn't affect your taxable income at all. 

When you sell, since both names are on the Deed, you will each report 50% of any Gain (no loss is claimed on sale of a personal residence).  However, with the Home Sale Exclusion usually the sale is not even reported on a tax return.

Here's more info on the Gift Tax.

[Bounge22]

In 2017 my father and I bought my primary residence. The purchase price was $430,000. He put in $200,000 and I put in the remaining $230,000 and I also paid all the costs incurred with owning the house. We are listed as joint tenants on title. The home is my primary residence. It is not, and never has been, my father's primary residence. We are planning to sell the home in 2022 and we anticipate approximately $250,000 in gain. He is willing to gift me all equity in the home, but we're not sure the best way to go about this and any help will be appreciated. Our plan is for him to quit-claim the deed to me, then file a 709 reporting that he gave me a gift of half the value of the sale of the property. Is this okay? Will it cause any trouble with the IRS? We are willing to pay capital gains taxes on his portion of the gain if necessary, but we'd rather not if we don't have to. Are there any other tax implications that we should be aware of? Thank you. 

[tagteam]

You will take your father's basis; he will not have to pay capital gains tax as a result of the gift.

Your father will have to file a 709 to report the fair market value on the date of gift.