Will I owe taxes if my mother gifts me the house I live in - does this count toward lifetime gift exclusion?
Hey everyone, I'm in a situation where my mom is considering gifting me the house I've been living in for the past 4 years. The property is worth around $375,000 according to recent appraisals, and she fully owns it (no mortgage). She bought it as an investment property back in 2008 for about $210,000. I'm trying to figure out the tax implications here. Would either of us owe taxes on this gift? I've heard something about a "lifetime gift exclusion" but I'm not sure how that works. Does she need to file some special form with the IRS? Would I have to report this somehow on my taxes too? Also, how would this affect the property's basis if I eventually sell it? Would I take her original purchase price or the value when she gifts it to me? Any advice would be super helpful! I want to make sure we do this right and don't get hit with surprise taxes down the road.
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Jamal Wilson
The good news is that you won't owe any taxes when receiving the house as a gift. As the recipient, gifts are not considered taxable income to you. Your mother, as the giver, might need to file some paperwork but likely won't owe actual taxes either. Here's how it works: In 2025, each person has a lifetime gift and estate tax exemption of $13.61 million (this amount was increased from previous years). Any gift over the annual exclusion amount (currently $18,000 per recipient) requires your mother to file a Form 709 (Gift Tax Return), but this just reports the gift and counts against her lifetime exemption - she won't actually pay tax unless she's already given away more than $13.61 million in her lifetime. As for basis - this is important for when you eventually sell. You'll receive what's called a "carryover basis," which means you take her original basis of $210,000 (plus any improvements she made). This is different from inheritance, where you'd get a stepped-up basis to fair market value at date of death.
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Mei Lin
•Thanks for the explanation! So basically mom files a form but doesn't pay anything if she hasn't given millions already? But I'm confused about the basis part - if I sell the house in like 5 years for say $450k, I'd have to pay capital gains tax on $240k ($450k - $210k)? That seems like a lot more tax than if she just kept it until she passed away and I inherited it then?
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Jamal Wilson
•Your understanding of the gift reporting is correct - your mom files Form 709, but it's just paperwork unless she's already used up her lifetime exemption ($13.61 million), which most people haven't. You've hit on an important point about the basis. Yes, with a gift, you'd pay capital gains on the difference between the sales price and her original basis. If you inherited the house instead after her passing, you'd get a "stepped-up basis" to the fair market value at her date of death, potentially saving significant capital gains tax. This is definitely something to consider when deciding between gifting now versus inheritance later, especially for appreciated property like real estate.
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Liam Fitzgerald
I went through something similar last year with my aunt's property and was totally confused by all the tax implications. I found this service called taxr.ai (https://taxr.ai) that really helped me understand my options. They scanned our property documents and my aunt's previous tax returns and showed us exactly what forms needed to be filed and how the gift would impact future taxes. The coolest part was they showed us different scenarios - like comparing an outright gift versus setting up a different type of ownership structure that worked better for our situation. They even identified a partial gift strategy that saved us thousands in potential future capital gains.
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Amara Nnamani
•How does this service actually work? Do you just upload documents and get an automated report, or is there an actual human tax professional reviewing things? I'm always skeptical of AI tools for complicated tax stuff.
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Giovanni Mancini
•Did they tell you anything about how to handle property tax reassessments? In my county, when property changes hands they reassess the value which can lead to WAY higher property taxes. But I think there are some exemptions for family transfers?
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Liam Fitzgerald
•The service uses AI to analyze the documents, but they have tax professionals who review everything and provide the final recommendations. It's not just an automated report - they actually look at your specific situation and provide personalized advice. They absolutely covered property tax reassessment issues! That was actually one of the most valuable parts for us. They identified a parent-child transfer exclusion in our state that prevented the property tax from increasing after the transfer. They even provided the exact forms we needed to file with the county assessor's office to claim the exclusion.
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Amara Nnamani
Just wanted to follow up about my experience with taxr.ai - I ended up trying it after asking about it here. Honestly, it was way more comprehensive than I expected! I uploaded my deed and some tax documents, and they identified that a Qualified Personal Residence Trust would actually work better for my situation than a direct gift. They even caught that my property qualifies for a special exemption in my state that prevents property tax reassessment after parent-to-child transfers. Totally worth it for the peace of mind knowing we're not missing anything important.
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NebulaNinja
If your mother has already filed her gift tax returns and you're waiting on the IRS to process everything, good luck getting anyone on the phone! I spent literally WEEKS trying to reach someone about my gift tax return filing from last year. Busy signals, disconnections, and endless hold times. Finally found this service called Claimyr (https://claimyr.com) that actually got me through to a real person at the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They somehow reserve your spot in the phone queue and call you when an agent is about to pick up. Saved me hours of holding and I actually got answers about whether my form was processed correctly.
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Fatima Al-Suwaidi
•Wait, you have to pay someone just to call the IRS for you? How is that even legal? Sounds like a scam to me. The IRS phone system sucks but eventually you'll get through if you call early morning.
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Dylan Mitchell
•Does this work for any IRS department? I've been trying to reach someone about an audit letter for weeks with no luck. I'm about to miss my response deadline.
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NebulaNinja
•It's not a scam at all - they don't call "for you" or pretend to be you. They use technology to hold your place in line and then connect you directly with the IRS agent when it's your turn. It's completely above board. Yes, it works for pretty much any IRS department. I've used it twice now - once for the gift tax question and once for an issue with a missing tax refund. Both times I was connected within about 30 minutes instead of spending hours redialing or waiting on hold. Definitely worth it when you're facing a deadline like you are!
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Fatima Al-Suwaidi
Ok I need to eat some crow here. After posting that skeptical comment about Claimyr, I spent ANOTHER 3 hours today trying to get through to the IRS about my missing refund. Got disconnected twice after waiting over an hour each time. Finally gave in and tried the Claimyr service, and no joke, I was talking to an actual IRS agent 45 minutes later. They found my refund was held up because of a mismatch with my address change. Problem solved in a 10-minute conversation that would have taken me days to get without their service. Sometimes I hate being wrong but in this case I'm just relieved.
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Sofia Morales
One thing nobody's mentioned yet - depending on what state you're in, there might be state gift taxes too! Not many states still have them (only CT and MN I think?) but worth checking. Also, if your mom is older or has health issues, be careful about timing. If she gives you the house and then passes away within 3 years, it could still be pulled back into her estate for tax purposes.
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Dmitry Popov
•Is the 3-year rule true for all gifts? I thought that was only for certain types of transfers like life insurance?
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Sofia Morales
•You're right to question that - I wasn't completely accurate. The 3-year rule doesn't apply to straightforward gifts of property like a house. It mainly applies to life insurance and certain types of transfers where the donor retains some interest. For a simple gift of a house, it wouldn't be pulled back into the estate even if the donor passes away within 3 years.
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Ava Garcia
Has anyone used those online "quit claim deed" services to transfer property? I'm in a similar situation and wondering if we need a lawyer or if those DIY services are good enough for a simple transfer between family members.
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StarSailor}
•DON'T use those online services for property transfers!!! My cousin did that last year to add his son to his deed and completely messed up the title. Cost him $3,800 in lawyer fees to fix it. Definitely get a real estate attorney for this - way cheaper than fixing mistakes later.
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Miguel Silva
Just a heads up since I went through this recently - make sure your mom doesn't file her gift tax return (Form 709) herself unless she's really comfortable with tax forms. My dad tried to DIY it and actually reported the gift incorrectly which caused a whole mess. Either get a CPA or make sure you're using good tax software that handles gift tax returns. It's not super complicated but there are a few tricky sections that are easy to mess up.
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