Gifts to Others

Presently, you may give up to $11,000 per year worth of cash or other property to ANYONE without incurring any gift tax (this of course would reduce your ultimate estate tax liability since you’ll have less to pass on at your death). So, a child can receive up to $11,000 from each parent without there being any tax liability. If this threshold amount is exceeded, a gift tax return (Form 709) needs to be filed for the year of the gift. Such expenses as child’s medical, dental, tuition, insurance, etc. made DIRECTLY to the provider do not count as a part of the $11,000 limit. Be careful not to allow someone else to make the payment and then reimburse that person. This amount is not excepted form gift tax liability. Note that subsequent income or capital gains from the gifts other than cash are taxable to the gift recipient (donee).

I’ve heard it said that parents may transfer any real property to their children without threat of reassessment. This is NOT true. Only the parents’ PRINCIPAL residence may be transferred without any reassessment (California proposition 58) to children, step children and in-laws. All other California real property is limited to the lifetime cumulative assessed value of $1,000,000 before the reassessment is required. Transfers involving spouses or trusts for spouses are not subject to this limitation.