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Gifting vacant land

Old 06-01-2015, 06:00 PM
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Default Gifting vacant land

I will be on the receiving end of a property that is about 25 acres (no buildings) with gas, mineral and timber rights. My Dad, who is in good health and currently owns the property will retain gas and mineral until death. He wants me to take the ground now so there's one less thing on his plate. Trying to determined the best way to transfer the deed and pay minimal taxes. Does he gift it? Sell it at a discount or close to his purchase price to avoid capital gains? Other options?
Also, the wife isn't interested in the mountains so I'll need to protect it in case of divorce down the road.
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Old 06-01-2015, 06:26 PM
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In living trust.
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Old 06-01-2015, 07:15 PM
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Simple and cheap: deed of gift to you.

More costly but a great option is a land trust.
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Old 06-01-2015, 07:49 PM
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Originally Posted by mobjack22 View Post
Simple and cheap: deed of gift to you.
Unless I'm mistaken, vacant land still falls under the IRS guidelines of a gift and may not be so cheap, depending upon the value of the land. Not sure if the IRS increased the gift threshold is this year, but it was $12,500 per person. If the land is held only in his fathers name and he gifts it to only his son and the value of the land is over $12,500 (unless threshold is higher now), then taxes would have to be paid on the value over the $12,500 threshold.

If you weren't worried about a divorce, your father could just add you onto the deed and have it in both of your names and then when he passed, you would be the single deed holder.

Without knowing the value of the land and with divorce a possible concern, then a trust may be your best option.
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Old 06-01-2015, 08:02 PM
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Could you do a post nup that excluded the land from any potential divorce settlement?
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Old 06-01-2015, 08:18 PM
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You can gift any amount you want up to 14Kyr with no ramifications. Above that and it counts against your lifetime exemption of $5.43 million. If the property plus the rest of his estate is less than that there is no tax.

http://www.schwab.com/public/schwab/...fetime-Gifting
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Old 06-02-2015, 02:36 AM
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My father gifted me land 20+ years ago.

Counter letter, stating that the land was part of my inheritance, not subject to community property laws. Signed by all parties envolved encluding my wife.

A nominal value was assigned to the property. Counter letter stating that the transfer was done as a cash sale but no money had changed hands.
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Old 06-02-2015, 05:41 AM
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I'm not around my research software but you (your Dad) may have to file a gift tax return no matter what the value. If you gift a gift that is not a present interest, you have to file a gift tax return no matter what. I'm not sure if him retaining the mineral rights would qualify or not. Something to think about as well.
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Old 06-02-2015, 05:42 AM
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The obvious answer is talk to a tax attorney.

Several years ago, my(now) ex-wife's mother deeded her condo to my ex and her sister. There was no gift tax involved and would not have been any inheritance tax. Unfortunately, my MIL died less than 2 years after the transfer, so it made the property subject to inheritance tax. This was the year before the exemption went to $1 mil or it wouldn't have mattered anyway. I'm going to guess that what she did (with an attorney) was to add them to the deed as was suggested before. If that's the case, it doesn't shield the property from a divorce.

Again, tax attorney.
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Old 06-02-2015, 09:30 AM
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No advise here, but I am shocked at the amount of you folks that actively figure in the possibility of you getting a divorce on each and every business decision that's made.

I am the direct opposite! Every business decision or financial decision is based on how much money or assets I can leave my wife. I am truly sorry for you and those like you that must think that way. It must really take a toll as the years go by.

Not judging at all, just an observation.
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Old 06-02-2015, 09:40 AM
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Originally Posted by spraynet 1 View Post
No advise here, but I am shocked at the amount of you folks that actively figure in the possibility of you getting a divorce on each and every business decision that's made.

I am the direct opposite! Every business decision or financial decision is based on how much money or assets I can leave my wife. I am truly sorry for you and those like you that must think that way. It must really take a toll as the years go by.

Not judging at all, just an observation.
Sounds like she has you trained.Not judging.just an observation.
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Old 06-02-2015, 10:13 AM
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Originally Posted by spraynet 1 View Post
No advise here, but I am shocked at the amount of you folks that actively figure in the possibility of you getting a divorce on each and every business decision that's made.

I am the direct opposite! Every business decision or financial decision is based on how much money or assets I can leave my wife. I am truly sorry for you and those like you that must think that way. It must really take a toll as the years go by.

Not judging at all, just an observation.
I'm going to try and outlive my wife. LOL
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Old 06-02-2015, 10:37 AM
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GRIT GRAT GRUT.

Find a local law firm with experience completing such transactions and they will be able to take you and your father through the process.
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Old 06-02-2015, 12:34 PM
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Originally Posted by mitchell master View Post
Sounds like she has you trained.Not judging.just an observation.

No, no training in my marriage, just 100% mutual respect. I guess I'm very lucky, or when these types of topics come up, the tertosteron gets in the way of the posters mouth.
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Old 06-02-2015, 01:34 PM
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I have had land gifted to me recently. He can gift you a portion of the value of the land up to $16,000 per year tax free (I believe that amount was correct, at least here in LA). Do that however many years you need to cover the value of the land.

Be careful having him sell you the property at an extremely reduced price, it could come back to bite you.

Ask a Real Estate Attorney, they usually can tell you a few ways to skirt Uncle Sam and still be legit
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Old 06-02-2015, 01:55 PM
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Originally Posted by bornboater View Post
I have had land gifted to me recently. He can gift you a portion of the value of the land up to $16,000 per year tax free (I believe that amount was correct, at least here in LA). Do that however many years you need to cover the value of the land.

Be careful having him sell you the property at an extremely reduced price, it could come back to bite you.

Ask a Real Estate Attorney, they usually can tell you a few ways to skirt Uncle Sam and still be legit
Unless you are over the exemption amount why would you just gift the annual exclusion amount? You aren't going to pay tax on it anyway so might as well just get it over with.
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Old 06-02-2015, 04:57 PM
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If you place a low value on the land now to avoid taxes then if you ever sell it you will have to pay even more in capital gains, if the property goes up some. If you keep it in your father's name for now and he wills it to you you should not have any taxes on it at that time. I am NOT by any means an expert or professional on this. I'm just going by what I learned a little too late and wound up paying those capital gains taxes. As said, seek professional help on this, but make sure the person you seek out knows how to protect you against future taxes.
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Old 06-02-2015, 05:56 PM
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Originally Posted by spraynet 1 View Post
No advise here, but I am shocked at the amount of you folks that actively figure in the possibility of you getting a divorce on each and every business decision that's made.

I am the direct opposite! Every business decision or financial decision is based on how much money or assets I can leave my wife. I am truly sorry for you and those like you that must think that way. It must really take a toll as the years go by.

Not judging at all, just an observation.
I thank you Spray; I was wondering the same thing. Real solid affairs!!
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Old 06-02-2015, 06:04 PM
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Originally Posted by Jimm View Post
I thank you Spray; I was wondering the same thing. Real solid affairs!!
You buy insurance just in case.......don't you?
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Old 06-02-2015, 06:06 PM
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Thru a trust , part of inheritance (no taxes paid), and your wife cannot touch it . Just gave my son 1/2 of my business thru tax attorney and cpa .
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