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Daily Real Estate News  |  May 31, 2011  |   Real Estate Gifts to Family Members? Notify IRS
Be sure to remind your customers who are buying real estate as a gift to a family member that they need to report such real estate gifts to the Internal Revenue Service. The IRS is increasingly scrutinizing these gifts using state land-transfer records to prove the omissions, The Wall Street Journal reports.

Any gift--including property--to a person that is valued at more than $13,000 requires the giver to let the IRS know by filing a gift-tax return (Form 709), even if the transfer falls within the $5 million lifetime exemption amount.

In a court document from December, the agency said that in the last two years 323 taxpayers had been examined for failing to report possible real estate gifts, another 217 were being examined, and 250 were being considered for review, The Wall Street Journal reports.

The states that have handed over information on gift-like transactions are Florida, Connecticut, New Hampshire, Hawaii, Nebraska, Tennessee, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas, Virginia, Washington, and Wisconsin, according to court documents. Through its investigation, the IRS so far has uncovered a high "failure-to-report rate" in these states--with noncompliance rates reaching even 100 percent in Ohio based on case reviews as well as 90 percent in Florida and Virginia, 80 percent in Washington, 60 percent in Connecticut and Nebraska, and 50 percent in Wisconsin.

Source: “IRS Scrutinizes Gifts of Real Estate,” The Wall Street Journal (May 26, 2011)

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