# Tax implications for gifting someone a house



## KitKat270 (Feb 27, 2012)

Hi there. I've looked everywhere online and can't seem to get a straight answer to this.
My mom is getting married and moving in with her husband. She has decided to give my sister her house. The house is valued at $80,000. My mother purchased it for $73,000 about 3 years ago.

What are the tax implications for my mother and sister in this situation? I know there are land transfer taxes, but what else?


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## Square Root (Jan 30, 2010)

if it was her principal residence there should be no tax implications to your mother. Your sister's cost base will be market value at date of transfer.


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## MoneyGal (Apr 24, 2009)

What SR said.


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## KitKat270 (Feb 27, 2012)

Sorry, but I'm really not too knowledgable about this kind of stuff. What is a cost base? Please dumb this down for me lol
I basically want to know if my sister will get heavily taxed at some point, either right now when she gets the house or later down the road when she goes to sell it. She is planning on living in it for a couple years.
Thanks.


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## Young&Ambitious (Aug 11, 2010)

cost base = acquisition cost. 

Your mother won't be impacted as she can use the principal residence exemption on any property value gains, your sister will be able to use the same exemption down the road for any property value gains.


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## Eclectic12 (Oct 20, 2010)

KitKat270 said:


> Hi there. I've looked everywhere online and can't seem to get a straight answer to this.
> My mom is getting married and moving in with her husband. She has decided to give my sister her house. The house is valued at $80,000. My mother purchased it for $73,000 about 3 years ago.
> 
> What are the tax implications for my mother and sister in this situation? I know there are land transfer taxes, but what else?


There will be all of the costs, with any applicable taxes that would happen during a regular sale. As an example, the real estate lawyer will need to be paid and any taxes on their services.

The main fees plus related taxes that will be avoided will be real estate agent.


As several others have pointed out, if the house is your mom's principal residence, there are no tax implications for her. 

In your sister's case - will it be her principal residence or a rental property? 

If it's a principal residence, there are no tax implications for your sister either. 

If it's a rental property, she would be wise to get a couple of appraisals to establish the fair market value, which will be the cost base for when the house is sold.


Cheers


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## andrewf (Mar 1, 2010)

I'm just flabbergasted at the thought of an $80k house.


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## stephenheath (Apr 3, 2009)

Couldn't you just have the lawyer add the sister's name to the deed and not bother with the rest of it? Maybe ask the lawyer that is going to do the paperwork (since that part is essential) how to do it to minimize costs/taxes?


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