What are the tax implications of giving away property?

Giving away property can have significant tax implications, depending on the particular situation. In California, gifts of property are subject to the federal gift tax. This is a tax imposed on transfers of financial assets other than income from one individual to another. The federal gift tax generally applies to gifts above a certain threshold each year, and is due when the gift is made. In California, property that is given away may be subject to both the federal gift tax and the California gift tax. While the federal gift tax applies to gifts of any sort, the California gift tax usually does not apply to gifts of real estate. In some cases, such as when the donor transfers ownership of the property to another person or entity, the gift may be exempt from the California gift tax. For those wishing to give away property, there are some important things to consider. If a donor gives away property that has appreciated in value since they purchased it, they may be subject to capital gains taxes on the appreciation in value. Additionally, if the donor is gifting the property to another individual, they may be responsible for writing a legal deed or quitting claim deed to ensure proper transfer of ownership. It is important to work with an experienced attorney to understand all of the tax implications involved in giving away property. An attorney can help ensure that the gift is done legally and that all applicable taxes are paid in a timely manner.

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