Article Date:
May 2022

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Is Now the Time to Transfer Your Home to Your Adult Child?

Scenario: Your adult child wants to buy a home in today’s overheated market.


Needless to say, it’s a struggle against the odds. Meanwhile, you’re ready to check out of your current home.


Maybe you want to downsize or move to a warmer climate or a lower-tax or no-tax state. Whatever the reason, you’re financially set and don’t really need the money from selling your home.


So, consider the following options to help your home-starved child. We will explain the federal income and estate tax consequences.


Option 1: Make an Outright Gift


Say you’re feeling so generous that you might just simply give your home to your adult child. What a deal for the kid!


Tax-wise, if you make the gift this year, it will reduce your $12.06 million unified federal gift and estate tax exemption. To calculate the impact, reduce the fair market value of the home you would be giving away by the annual federal gift tax exclusion, which is $16,000 for 2022. The remainder is the amount that would reduce your unified federal exemption.


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