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Recently, the Internal Revenue Service has begun cracking down on gifts among family members that have not been reported. People who live in Florida and elsewhere are required to report such gifts on a Form 709. This form is known as a United States Gift Tax Return. It must be filed for transfers of property valuing more than $13,000, in spite of the current law that states that the lifetime gift tax exemption limit is $5 million.
According to an IRS document reported on in the Wall Street Journal, 323 taxpayers have been investigated for failing to report real estate gifts since 2009. Another 217 are being examined and 250 more could be in the future. The IRS has been using real estate records to help pinpoint the transactions that should have been reported on a Gift Tax Return. Florida is among the states that have provided the IRS with the real estate records necessary to conduct the investigation. According to the IRS document, Florida has a noncompliance rate of 90 percent.
Giving a family member a gift of real estate is a very generous gesture. But doing so without taking the proper legal steps and reporting the gift on a Gift Tax Return can land you in some legal hot water. Florida residents are advised to be sure they are taking the proper legal channels when bestowing an intra-family gift.
As with other legal transactions, the process and paperwork can be overwhelming and complex. A Florida estate planning lawyer can offer the advice and help you need to ensure you are taking the proper steps to avoid any legal ramifications. It is never too soon to start planning for the future, and an attorney can make sure that matters dealing with asset distribution are done legally, to avoid any recipients getting into trouble in the future.