Mon Apr 29 2024, by Tyler Gardner

Tax ImplicationsEstate PlanningGift TaxCapital Gains TaxReal Estate

Tyler? Yup.

Looks like you sold your house to your son for $1? Yup.

Pretty sneaky, huh? It's actually worth $1,000,000.

I used to be an estate planner. Well, thank you for doing that.

What do you mean? Well, now when he tries to sell the house because you bought it for $200,000 back in 1980, he will actually owe us capital gains tax on $800,000 of that.

Really? Yeah, not to mention you still have to file a gift tax form 709 to let us know that you actually passed down $983,999 to your son.

Because that's the difference between the fair market value and the purchase price.

Well, that stinks. How did you know this?

Uh, we're the IRS. Well, that makes sense.

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