Q. My wife and myself along with my in-laws were the grantees on a real estate deed representing the property where my wife and I live. Recently my in-laws transferred their portion of the property to us.
This transfer was not intended as a gift, and I need to know how to help them avoid paying a gift tax.
The background here is that my in-laws were selected to have an opportunity to purchase a home in this subdivision, and my wife and I became "riders" on this. My in-laws aren't co-sponsors in the mortgage and never gave us any funds for the down payment. What should I do to avoid their paying a gift tax?
A. I would be very surprised if there is any tax due.
What your in-laws did in this transaction was to surrender to you and your wife any claim they had on the property -- and since they put up no cash, I suspect they had no claim at all against the property.
They would have surrendered something of value only if the "rights" to buy in your subdivision had a real marketable value.
Was this opportunity something of real value, rather than a marketing ploy? This strikes me as dubious.
However, there's an easy way to put all of this to rest. Simply ask the people who granted that "opportunity to buy" to write your in-laws a letter saying that that opportunity had a fair market value of less than $20,000.
Your in-laws can stash that letter away with the tax papers (just in case of a challenge) and then forget about it.