Ad­vice from an en­rolled agent help­ful for tax is­sues

Sun Sentinel Broward Edition - Homespot - Broward East - - CAMPBELL&ROSEMURGY - By Ilyce Glink and Sa­muel J. Tamkin

Tri­bune Con­tent Agency Q: Iready­our

ad­vice to the woman want­ing ad­vice on trans­fer­ring her home to her daugh­ter. She noted a pur­chase price/ba­sis of $100,000, but not when it was pur­chased, so that ques­tion needed clar­i­fi­ca­tion. I re­tired from the IRS with 30 years of service and I aman en­rolled agent at this time.

If she “sells” the house to her daugh­ter for $100,000, it would be im­por­tant to know whether the home was a rental prop­erty and for how long. If she owned it for some time, she might have de­pre­ci­ated the home over the years and she could have a sig­nif­i­cant tax to pay on the sale.

Another el­e­ment to con­sider is if the fair mar­ket value of the home is sig­nif­i­cantly higher than the pur­chase price to her daugh­ter, the dif­fer­ence could be of im­por­tance, even if she car­ries the loan on the home. Of course, be­ing a lender on the home raises is­sues as to whether the in­ter­est rate and terms be­tween them are sim­i­lar to those in the fi­nanc­ing mar­ket place. If the terms are not in line with the mar­ket, she could have an is­sue of a bar­gain pur­chase.

If she gifts the prop­erty, the mom will ex­ceed the $14,400 max al­lowed per cal­en­dar year and must file a gift tax Form 709 with the IRS, and may have to pay a gift tax. The same is­sues will ex­ist as to her re­main­ing ba­sis or fair mar­ket value, which may re­sult in the amount of gift taxes due. If she rents the prop­erty, or uses a lease to buy, many of these same is­sues ex­ist as well as the pay­ment of mar­ket rent, which could re­sult in tax levies if there is a bar­gain rent is­sue.

In any case your ad­vice was cor­rect in her con­tact­ing an at­tor­ney, but he/ she should be versed in not only real es­tate laws of the state in which the prop­erty is lo­cated, but on ap­pli­ca­ble federal and state tax laws.

I have found in my 44 years in the tax arena that a sig­nif­i­cant num­ber of real es­tate at­tor­neys are some­what less knowl­edge­able about the tax laws on the trans­fers than they should be and those who are usu­ally work with CPAs and en­rolled agents who can pro­vide the cor­rect in­ter­pre­ta­tion of the tax ef­fect of the par­tic­u­lar trans­ac­tion. A:

Thanks for the added in­for­ma­tion. We’re big fans of EAs (en­rolled agents), and like to pro­mote them along with Cer­ti­fied Public Ac­coun­tants (CPAs) as good re­sources for con­sumers.

While we’re glad we pro­vided some help­ful in­for­ma­tion, you cer­tainly added quite a num­ber of is­sues for our reader to con­sider. While not all real es­tate at­tor­neys will know all the tax de­tails, we’d hope that they could re­fer a per­son to an ac­coun­tant or EA for fur­ther in­for­ma­tion. If you are look­ing for help with a tax is­sue, you can find an EA near you on the NAEA web­site at TaxEx­perts.naea. org.

Ilyce Glink is the cre­ator of an 18-part we­bi­nar and ebook se­ries called “The In­ten­tional In­vestor: How to be wildly suc­cess­ful in real es­tate,” as well as the au­thor of many books on real es­tate. She also of­fers in­for­ma­tion on her YouTube chan­nel. (youtube.com/user/ Ex­pertRealEs­tateTips).

Con­tact Ilyce and Sam through her web­site, ThinkGlink.com.

© 2016 Ilyce R. Glink and Sa­muel J. Tamkin. Dis­trib­uted by Tri­bune Con­tent Agency, LLC.

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