Lowrance Law, LLC
The IRS started a gift tax examination project a while back. In Virginia, they received information of property transfers between non-spouses relatives. Many times parents may transfer real property to childen or other non-spouse relatives without receiving any payment. The IRS considers this transfer a gift and a gift tax must be paid. The gift tax is imposed on the transfer of money or other property by gift. The first $13,000 of gifts of present interests made annually by a donor to each donee is excluded from the donor’s taxable gifts. For a gift meeting the requirements, a donor must file a Form 709 and pay a gift tax. The IRS has gotten information about transfers of real property between non-spouse relatives from Connecticut, Florida, Hawaii, Nebraska and Virginia among other states.
The IRS recently got a court order to get the real property transfers made to non-spouse relatives from the California Board of Equalization. This was a major victory for the IRS. If you transferred real property to a non-spouse for no payments or consideration, you may get a letter from the IRS asking where is your Form 709–gift tax return. Remember to consult a tax professional if you get such a letter.