Suppose you own property you intend to transfer to your loved ones. Perhaps you are considering giving your children an ownership interest in your principal residence. But before you act, review the tax consequences of your decision as tax laws include provisions involving sales to related parties.
As you might imagine, the IRS’s definition of a related party covers relatives like your children, grandchildren and siblings, but also applies to business entities you own. Here are several common situations you may encounter, and tips to help you avoid a tax surprise:
As you can see, transferring property to family members can get complicated and cause undue tax obligations if not handled correctly. So seek advice long before transferring key assets.
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The possibility of capital gains tax should be understood before selling your residence. Tax surprises here could be costly!
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