What Are My Tax Liabilities for Property Given by a Gift Deed?
Full Question:
Answer:
Transfer of a gift deed can be reported as a gift for federal tax purposes. The cost basis in the property is used to calculate profit. In some cases, a step-up basis applies to the donee so that the current market value becomes the donee's basis. If not, the basis of the donor transfers to the donee. There is no step-up in basis for lifetime gifts. When appreciated property is transferred by gift, the recipient's "cost" (basis) of the property is the same as that of the donor (even though the recipient didn't pay anything for the property). This means that the recipient must declare any gains as taxable income when he or she sells the property in the future.
The answer will depend on all of the circumstances, such as the price paid for the property by the father. I suggest you consult with a local tax professional who can review all the facts and documents involved
