I have a question about gift taxes.

Dayton, OH Viewed 70 times. Posted 4 months ago in Real Estate

I bought a house with a friend and he got married about 2 years after we bought the house. He and I financed the house together for 30 years so there was little to nothing paid off on the principal. The new couple, my friend and his wife, refinanced the house in just their names. I was left to remove my own name from the property deed. My friend owes me $5000 dollars so I decided to leave my name on the deed until he paid me back. Now he currently owes the county about $10,000 in property taxes so I don't think I'll ever get paid back. I've decided to quitclaim the property but the county is telling me that I'll have to pay them fees for half the value of the property and pay gift taxes to the state and IRS. Is this really the case? I used very little of my money on this property.

Answers (2)

Franklin Moore Mclaughlin IV

This attorney is licensed in California and 2 other states. Posted 4 months ago.

I wouldn't worry about gift taxes to the IRS. You can make gifts of up to $13,000 per year per donee without incurring any gift tax liability. It sounds like the value of anything you are trasnferring is worth less than $13,000. Plus, you may have been only a nominee owner anyway, in which case you would not even be treated as the owner of the property for git tax purposes anyway.

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Paul Arnold Nidich

This attorney is licensed in Ohio and 1 other state. Posted 4 months ago.

Before gift taxes are even an issue, you have to use up your unified exemption, and you are no where near this. If the value of your gift exceeds the amount of current exclusion, you only need to file a gift tax return to put the IRS on notice that you have used some of your unified exemption.

I don't know whom you talked to at the county, but it isn't likely that you got good legal advice, something the person should not have been giving you in the first place. The most important question, though, is: are you sure you have no financial liability for the mortgage on the property? Did they really re-finance or did they merely get a second mortgage? There is a difference between who owns a piece of real estate and who is financially responsible for the mortgage(s). If your name is on the deed, is it as a joint tenant? If so, you own half of the property. Refinancing the property has nothing at all to do with ownership of the property.

I suggest you consult a real estate attorney in Montgomery County to find out what you legal rights are.

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