If you give a plot of land to your child or grandchild, it’s considered a gift in the eyes of the IRS. Gifts of real estate to your child are not tax deductible. As of 2016, the IRS allows you to give $14,000 annually to anyone you like, tax-free. If you’re married, you and your spouse can each give $14,000.
Is there depreciation recapture on gifted property?
Because you received the property as a gift, the adjusted basis of the donor (your in-laws) transferred to you and your husband. Additionally, if this was rental property where depreciation was claimed, you may have to recapture some of the gain as ordinary income rather than capital-gain income.
Can a property be gifted as a dowry?
For example, to curb the malpractice of dowry, the law says that a property cannot be gifted as dowry to the groom. Also, the property comes back to you if the person to whom you have gifted it dies in your lifetime and he doesn’t have any descendants. But this is only applicable if you mention this condition at the time of signing the gift deed.
When was the ranch land gifted to me?
I am selling 50 acres of ranch land that was gifted to me by my uncle in 2000. That ranch land was gifted to him by my grandfather in approximately 1975. The property was acquired by my grandfather in the 1930s by means that I don’t know.
How to determine cost basis of gifted property?
If your grandfather bought the property, then there is your starting point. You are going to need to find a way to figure out what he paid for it. You can research the property records at the courthouse and see if the sale was recorded. If your grandfather inherited the property, then we have a new scenario.
What are the tax implications of gifting proceeds from sale of land?
Archit Gupta, CEO, ClearTax replies: As your mother-in-law is looking to sell the land, she will have to pay tax on the capital gains. She will be liable to pay tax even if she gifts part of the proceeds to your wife. As the land has been held for more than 10 years, the gains will be long-term and taxed at 20% after indexation.
