The Money Mustache Community

Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: kenmoremmm on January 05, 2019, 11:55:23 PM

Title: Gifting vs Quit Claim Options
Post by: kenmoremmm on January 05, 2019, 11:55:23 PM

I don't know much on the subject, so I thought I'd ask.

We have a rental property. Paid off. Been rented out for 8 years. I'd like to part ways with it. Initial thought was 1031, but I'm curious if there's a workaround that would allow me to either gift it or quit claim it to a 3rd party (good, trusted friend), and then sell, and then transfer $$$ back over to me. The idea behind it would be to step up the basis and remove the depreciation recapture.

Doable?

Title: Re: Gifting vs Quit Claim Options
Post by: former player on January 06, 2019, 03:46:07 AM

Tax fraud?  Money laundering?  Maybe, maybe not, but you (and your trusted friend, separately) would need cast iron legal advice that it wasn't.

Title: Re: Gifting vs Quit Claim Options
Post by: cooking on May 13, 2019, 04:19:42 PM

I realize this thread is pretty old, but I took the risk of jumping in.

1.  Research what IRS considers "step transactions), in short doing in several steps what you couldn't do directly to save taxes.  They are not allowed by the IRS.

2.  Have you taken into account all the other tax consequences of doing the transaction in the way you propose?  (Capital gains to the straw man (your friend), gift taxes?