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

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.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Financial FAQs

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.