Is there a federal tax on the value of transferred property each time it is transferred?

by Paul K. Rudoy, CPA, PFS | Jan 21, 2019
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A family member signed over two properties that were held in a trust. Now he would like to get one of them back. As I understand, in California, each time a property is transferred the state will tax the value of the property. Is that also the case federally? Is there a way to transfer the property back without incurring additional taxes?

It sounds like this is a question about transfer tax. There is not a federal transfer tax, just state and local. But there could be federal and state income tax consequences to a transfer of a property due to the basis that the owner has in the property, including potential relief of debt issues. Further, when an asset with a value over $15,000 is transferred to another person, you are required to file a gift tax return for potential assessment of gift tax return or utilization of the lifetime gifting limits.

Due to the myriad of matters on such a transaction, I recommend you reach out to a CPA that has expertise in real estate matters.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Paul K. Rudoy, CPA, PFS, is managing partner of H2R CPA in Pittsburgh, Pa.

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