Posted on: 27th Jul, 2009 04:36 pm
Can a family menber contribute to new house construction w/out creating a tax liability?...My wife and I (and Mother in law) all live in Oregon. My Mother in law is selling her house and wants to use the proceeds to help my wife and me to build a new house at our current residence, she also plans on residing at the new house as well (we will demo the old one). What’s the best way to record the new house so that we don’t get taxed for her contribution? She prefers not to be recorded at all and wants full ownership for the new house to be with my wife and myself (she is worried about her ex husband going after her proceeds from her sale). So the question is how can she contribute to the construction without creating a tax liability and give her a feeling of protection?
Hi dms!
Welcome to forums!
If she gives the sale proceeds from the old house as a gift to you and your wife, it is she who would would have to pay gift taxes for that amount. However, there is a gift tax exemption as well. Transfers of gifts up to $13,000 per person per year are not subject to tax. So if your mother in law makes a gift worth $13,000 she won't be liable for the gift taxes. As she wants to be a owner of the property, you can simply add her name to the property deed with the help of a quitclaim deed.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If she gives the sale proceeds from the old house as a gift to you and your wife, it is she who would would have to pay gift taxes for that amount. However, there is a gift tax exemption as well. Transfers of gifts up to $13,000 per person per year are not subject to tax. So if your mother in law makes a gift worth $13,000 she won't be liable for the gift taxes. As she wants to be a owner of the property, you can simply add her name to the property deed with the help of a quitclaim deed.
Feel free to ask if you've further queries.
Sussane