Great content! Just subscribed! Quick question, I was gifted my parents house earlier this year. I'm totally screwed right on the capital gains? My accountant told me I should be okay cause I'm not making over a certain amount of money (multi millions) anyways. What is your thoughts?
Hello Jerry, Thank you! We're glad you like the content and are very thankful for your subscription. From our understanding of your tax situation (which may be limited due to us being attorneys not CPAs or EAs), you are stuck with the initial tax basis of your parents on the property so you may have to anticipate a big tax bill when you go to sell the property. However, there may be 2 cases where you can avoid or at least mitigate some taxes. If either you are considered "low income" (single filer with taxable income up to $44,625 or married filing jointly up to $89,250), or the property is your principal residence ($250,000 capital gains tax credit on the sale for individuals and $500,000 for married couples filing jointly), then you may be able to avoid capital gains taxes. If you are "low income", then your long-term (more than 1 year of ownership) capital gains tax rate is 0%. If the property is your principal residence, then you will need to realize a gain (difference between tax basis and net sale proceeds) of more than the exclusion amount before capital gains taxes kick in.
Could you explain further the possible capital gains tax exposure you refer to in the situation referred to at 12:37? Thanks I was looking to further my knowledge on this subject.
Hello! The potential capital gains tax exposure I am referring to there is the fact that if one gifts property to another during thier lifetime (I.e., not as an inheritance), then the person doing the gifting (the donor) is also transferring over thier capital gains tax basis to the recipient (donee). A capital gain tax is a tax on the difference between what you acquired the property for (the tax basis) and what you sold it for. If someone inherits property, then they receive a stepped-up tax basis to the death of death value, meaning that the beneficiary's tax basis for capital gains is the date of death value, rather than the original owner's purchase value. However, if the recipient received the property as a gift during the original owner's lifetime, then there is no step-up in basis. Thus, if the recipient then sells the property, their tax basis will be the same as the original owner's - the initial purchase price.
@@bethellaw Say I give away $10,000 to each of my two sons each year as gift and I keep doing it for 50 years then I die. I gift way 1 million during my lift time. Does this reduce my estate tax exclusion amount by one million when I die?
Does a non-retirement brokerage account held as community property with a spouse in CA a) avoid probate, and b) get a step up in basis on the entire account value at the time of death of the first spouse?
I wonder if this applies to inherited property in another country. Real estate that is given to children as inheritance involving property in South America seems over whelming.
Hello Luis, Thank you for your question. Capital gains is a tax that is only due when there has been a sale of property and a gain was made on said sale. If you inherited gold, then any capital gains tax would only be due if/when you sold the gold. However, because you inherited the gold, you receive a step-up in basis to the fair market value of the gold at date of death. That means your capital gains tax would be the difference between the date of death value and the sales value. However, keep in mind that I believe New Jersey does have an inheritance tax meaning you may owe taxes on the value of that gold depending on its value. The gold should be released to you once the trust administration/probate is completed. However, you will need to report said inheritance on your taxes. The trust/estate will likely also report this on its tax return, so NJ knows where to collect the tax from.
my dad wants me to take over the 3 unit which is one of 4 properties he owns in a trust he want me to take one over but I do not want to pay taxes So i must wait till he passes..OR.. can i do a separate trust with me as the executor on this one property so he can sell in a 1031 exchange to buy another asset in the State I live in?
Clear, concise, not wordy; thumbs up!
Thank you! 👍
Very informative - thanks - and love the painting “scream” in the background
Thank you! Glad you enjoyed it!
Do you have a video, as you mentioned needed to be done, describing what happens once you cross the $12M threshold (for a sub trust)?
Great content! Just subscribed! Quick question, I was gifted my parents house earlier this year. I'm totally screwed right on the capital gains? My accountant told me I should be okay cause I'm not making over a certain amount of money (multi millions) anyways. What is your thoughts?
Hello Jerry,
Thank you! We're glad you like the content and are very thankful for your subscription. From our understanding of your tax situation (which may be limited due to us being attorneys not CPAs or EAs), you are stuck with the initial tax basis of your parents on the property so you may have to anticipate a big tax bill when you go to sell the property.
However, there may be 2 cases where you can avoid or at least mitigate some taxes. If either you are considered "low income" (single filer with taxable income up to $44,625 or married filing jointly up to $89,250), or the property is your principal residence ($250,000 capital gains tax credit on the sale for individuals and $500,000 for married couples filing jointly), then you may be able to avoid capital gains taxes. If you are "low income", then your long-term (more than 1 year of ownership) capital gains tax rate is 0%. If the property is your principal residence, then you will need to realize a gain (difference between tax basis and net sale proceeds) of more than the exclusion amount before capital gains taxes kick in.
Could you explain further the possible capital gains tax exposure you refer to in the situation referred to at 12:37? Thanks I was looking to further my knowledge on this subject.
Hello!
The potential capital gains tax exposure I am referring to there is the fact that if one gifts property to another during thier lifetime (I.e., not as an inheritance), then the person doing the gifting (the donor) is also transferring over thier capital gains tax basis to the recipient (donee). A capital gain tax is a tax on the difference between what you acquired the property for (the tax basis) and what you sold it for. If someone inherits property, then they receive a stepped-up tax basis to the death of death value, meaning that the beneficiary's tax basis for capital gains is the date of death value, rather than the original owner's purchase value.
However, if the recipient received the property as a gift during the original owner's lifetime, then there is no step-up in basis. Thus, if the recipient then sells the property, their tax basis will be the same as the original owner's - the initial purchase price.
@@bethellaw Say I give away $10,000 to each of my two sons each year as gift and I keep doing it for 50 years then I die. I gift way 1 million during my lift time. Does this reduce my estate tax exclusion amount by one million when I die?
Does a non-retirement brokerage account held as community property with a spouse in CA a) avoid probate, and b) get a step up in basis on the entire account value at the time of death of the first spouse?
I wonder if this applies to inherited property in another country. Real estate that is given to children as inheritance involving property in South America seems over whelming.
Gold inheritance tax in New Jersey do we need to pay capital gains tax before they release the gold
Hello Luis,
Thank you for your question. Capital gains is a tax that is only due when there has been a sale of property and a gain was made on said sale. If you inherited gold, then any capital gains tax would only be due if/when you sold the gold. However, because you inherited the gold, you receive a step-up in basis to the fair market value of the gold at date of death. That means your capital gains tax would be the difference between the date of death value and the sales value.
However, keep in mind that I believe New Jersey does have an inheritance tax meaning you may owe taxes on the value of that gold depending on its value. The gold should be released to you once the trust administration/probate is completed. However, you will need to report said inheritance on your taxes. The trust/estate will likely also report this on its tax return, so NJ knows where to collect the tax from.
my dad wants me to take over the 3 unit which is one of 4 properties he owns in a trust he want me to take one over but I do not want to pay taxes So i must wait till he passes..OR.. can i do a separate trust with me as the executor on this one property so he can sell in a 1031 exchange to buy another asset in the State I live in?