united-states federal-tax-law
Do I have to pay gift tax if I&#39;m put on a house deed?
<p>I've lived in the home ever since it was purchased. Purchased out right but did not make the signing with my significant other. Now 20 some years later, he wants to add me to the deed. We paid with a loan from a family member which I helped to pay back. I also paid for work done on the home. Please help with an answer to this question. </p>

<p>The transaction you describe is a "taxable gift" to the extent that it exceeds $15,000 in fair market value (as of 2019) and that your significant other is not your U.S. citizen spouse now (special rules apply to non-U.S. citizen spouses and an unlimited amount of gifts can be made without being taxable to a spouse, including a same sex spouse). The first $15,000 of fair market value per donor per donee per year doesn't count, however (there is a $100,000 of fair market value per donor per donee exemption per year for gifts to non-citizen spouses, if a qualified domestic trust is not the true recipient of the gift).</p>

<p>This means that the donor is required to report the gift on IRS Form 709 by April 15, of the year following the year in which the gift is made (or later if the donor files for an extension).</p>

<p>But, each person is entitled to make up to $11,400,000 of tax free gifts (during life and at death combined) that would otherwise be taxable per lifetime, and this amount is indexed for inflation, so it goes up each year.</p>

<p>So, in your situation, it is highly unlikely that any tax would actually be due in connection with your filing of Form 709, even though the donor is required to complete and file that form. In the event that both the annual and lifetime gift exclusions have been exceeded, the tax rate would be 40% of the fair market value of the gift (net of the mortgage debt to which the house is subject.</p>

<p>For example, if the house were worth $40,000,000 and had a $10,000,000 mortgage and you were given a 50% interest in it, the amount of the taxable gift would be $14,985,000 of which at least $3,485,000 would be subject to a 40% gift tax, i.e. $1,394,000), if you didn't get married (the tax would be $1,360,000 if you were a non-citizen spouse of the donor). </p>

<p>At one time there were some states with their own state gift taxes that had to be considered, but as of 2019, there are no such states.</p>

<p>Also, upon a sale of the house, the donee would be subject to one half of the capital gain that the donor would otherwise have owed taxes upon (this is called a "carry over basis").</p>

<blockquote>
  <p>We paid with a loan from a family member which I helped to pay back. I
  also paid for work done on the home.</p>
</blockquote>

<p>This could arguably reduce the amount of the gift (which would ordinarily be valued at fair market value as of the date of the gift), but given the amount of the lifetime exclusion, that detail is probably irrelevant unless your home is a world class mansion or castle.</p>

<p>First, gift tax is imposed on the donor (gift maker), not the donee (gift recipient), so if there's an issue - he is the one who has to worry about it. Second, if the two of you are married and you are a US citizen, there is an unlimited marital gift tax exemption - so that shouldn't be an issue. </p>

<p>Otherwise, gift tax may (or may not) be imposed on him, depending on the value of the home, among other things. He should consult a professional.</p>
