My wife's grandparents own a lot that they are going to gift to us that is worth $45,000. Is there a gift tax for this transfer?

[wgs2049]

The lot is in the name of both of my wife's grandparents.

[DoninGA · Accepted solution]

As the receiver of a gift from an individual you do not report the gift received on your tax return, regardless of the amount received or the value of the gift.

The giver of a gift to an individual does not report the gift given on a tax return.

The giver of a gift to an individual can gift up to $14,000 to a single individual in a year without having to complete a Gift Tax return, Form 709.  So each of your wife's grandparents can give you $14,000 for a total of $28,000 to you and each give your wife $14,000 for a total of $28,000 to her.  So that would be up to $56,000 in a year to you and your wife from the grandparents.  They would not need to complete a Form 709 since they have not exceeded the requirement of $14,000 to a single individual.

Note - Gift taxes are only assessed after the total amount of gifts given are greater than $5,450,000 (2016)

[SteamTrain]

@DoninGA

The question was not asked...but what is the "Basis" of that lot should the recipients later sell that lot?

AS I recall, it's the Grandparents basis, not the current assessed value....so it would be critical to get that information from the grandparents now for possible future use.

[DoninGA]

@SteamTrain - Correct as usual.  They need to know the basis of the lot being gifted to them and need to get that information from the grandparents.

[wgs2049]

What is "Basis"?

[DoninGA]

What the grandparents paid for the lot and the cost of any improvements to the lot before it is gifted to you.

[wgs2049]

As the lot was purchased in 1987, I am sure it was cheaper than what it is currently assessed. If I am correct, there should be no gift tax.

[DoninGA]

Correct there would not be a gift tax return required.

[SteamTrain]

But you need to know what the price was that they paid for it, because if/when you sell it...the price they paid at that time is what you use for your capital gain.  A few years, or 20 years from now, that price may not be retrievable, but might be now.  You will put that price in your lot folder to keep for the future.

[wgs2049]

In this scenario does it matter if it's her grandparents or her parents? Her grandparents are her legal parents. I'm assuming it does not. Thanks.