Gift or Inheritance

Gift or Inheritance

The tax cost associated with transferring real estate to a child differs depending on whether it occurs during the parent’s lifetime or after their death.

When a child inherits real estate, inheritance taxes can be significant. Opting to gift the property during one’s lifetime can be a more tax-efficient option. Gift taxes are generally lower than inheritance taxes. By gifting the property, a child can save considerably in terms of tax liabilities.

An even more advantageous approach is to make staggered gifts every three years, thereby benefiting from the lowest tax rates.

However, it should be noted that to maximize these benefits, all real estate gifts must be made at least three years before death due to the reserve of progressivity. This provision aggregates the value of recently gifted properties into the estate, often resulting in taxation at higher rates.

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