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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Gifting real estate to reduce tax

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: My wife and I own a valuable piece of property that we do not want to sell because we are still young and think the property will continue to appreciate. Can we gift $11,000 each to each of our 4 children in order to reduce the eventual estate tax without actually re-titling the property?

A: Yes, re-titling is not required as a condition to gift a partial interest in real estate. Actually, you can gift $12,000 each (or a total of $24,000 per child) in 2006 and the amount will rise in future years. While this gifting program might reduce the taxable estate by $100,000 per year (and save about $300,000 tax over the next ten years), this is likely to be less than the amount of appreciation in value you are now enjoying. So your potential tax problem will continue to grow as the property value continues to increase. You should do this gifting, but also explore other tax-planning options.


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