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In-Laws Gave Us Land

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Latest post Wed, Dec 21 2016 6:54 AM by LegalSecy. 6 replies.
  • Tue, Dec 20 2016 3:13 AM

    In-Laws Gave Us Land

    My in-laws gave us some land with an estimated fair market value of $40,800 this year.  They are paying any gift tax they may owe.

    We are paying the property tax for the whole year which is $1,046.

    The county allows payment of property taxes in either December or January.  One of my co-workers suggested that we could pay property taxes in for this year in January and next year in December and that way we'd get a double property tax credit (currently ~$130/yr) off our state income taxes next year.

    I don't see any advantage to doing that.  To me its just making everything more complicated.  Am I missing something?

     

  • Tue, Dec 20 2016 5:25 AM In reply to

    • Drew
      Consumer
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    • Joined on Thu, Mar 30 2000
    • PA
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    Re: In-Laws Gave Us Landllowedm

    Unlikely to be any actual gift  taxes due, just a return.

    At the Federal level ( I don't know how your state does it ) it sometimes makes sense to take the standard deduction one year and bunch as many deductibles into next as possible and itemize .....alternate 

    that does not work for me...but it makes sense to do some trial math before YE .

    Offhand a sooner deduction is better than a later one . And I often prepay where  allowed 

     

     



  • Tue, Dec 20 2016 8:25 AM In reply to

    Re: In-Laws Gave Us Land

    LegalSecy:

    My in-laws gave us some land with an estimated fair market value of $40,800 this year.  They are paying any gift tax they may owe.

    Your in-laws will not owe any federal gift tax on this gift unless they have already each used up their lifetime unified credit against gift and estate taxes, which would mean that they have already made gifts during their lifetime exceeding $5.45 million, and that limit goes up to 5.49 million next year. If they do it right, and assuming no other gifts from them to you in 2016, they won’t even need to use up any of that unified credit. They may need to file the federal gift tax return (Form 709) in April, but that would be about it. Few states have their own gift tax, so it is unlikely that they will have any state gift tax to worry about.

    You will want to get from your inlaws what their income tax basis in the property is along with documentation to prove that basis because that will be important to you should you sell the land some time in the future.

    LegalSecy:
    We are paying the property tax for the whole year which is $1,046.

    The county allows payment of property taxes in either December or January.  One of my co-workers suggested that we could pay property taxes in for this year in January and next year in December and that way we'd get a double property tax credit (currently ~$130/yr) off our state income taxes next year.

    I don't see any advantage to doing that.  To me its just making everything more complicated.  Am I missing something?

    And you’d get a double deduction on the federal income tax deduction for property taxes paid, too. But that doubling up next year (and delaying a deduction/credit you would get for 2016) is only really worth doing in two situations: (1) if you expected enough higher income for 2017 for some reason next year that might push you into a higher income tax bracket or (2) if your itemized deductions are not enough to exceed the standard deduction this year but you might have enough to make itemizing deductions worthwhile next year.

  • Tue, Dec 20 2016 9:03 AM In reply to

    Re: In-Laws Gave Us Land

    Obviously, if you pay $0 in 2016, you'll have nothing to deduct on your 2016 taxes.  If you pay 2 x $1,046 in 2017, then you'll be able to deduct $2,092 on your 2017 taxes.

    On the other hand, if you pay $1,046 in 2016 and $1046 in 2017, then you'll have deductions for each year.  Whether it's advantageous for you to double it up in one year and have nothing in another year is obviously not something we can know.

  • Tue, Dec 20 2016 1:53 PM In reply to

    Re: In-Laws Gave Us Land

    TY all, very helpful!

  • Tue, Dec 20 2016 2:18 PM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on Thu, Mar 30 2000
    • PA
    • Posts 51,431

    Re: In-Laws Gave Us Land

    IF this land is being held for bona fide investment / development purposes then you may be entitled to deduct expenses  relevant to same as well. ....I wound up with 15 acres a few miles away .....not a lot of deductibles ...but a few and they add up to being helpful...  Insurance and the costs of fence repairs .... 



  • Wed, Dec 21 2016 6:54 AM In reply to

    Re: In-Laws Gave Us Land

    I'm afraid that would be a stretch.  They gave it to us because I love camping there and said I was sad that they were going to sell it.

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