Can setting up a tenancy in common be a taxable event? 3 Answers as of January 26, 2011

Question concerns tenancy in common and taxes. If I purchase a property and set up title as tenancy in common with my son, then sell him my share for $1, is this a taxable event? Would it make any difference if the tenancy shares were not equal (e.g., me 1%, him 99%).

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Steven J. Fromm
Steven J. Fromm | Steven J. Fromm & Associates, P.C.
This is not a taxable event for income taxes. However, you are making a gift to him. If the real or fair market value of the tenants in common interest is greater than $13,000 then you must file a gift tax return, Form 709. You would also need to get a qualified appraisal from a qualified appraiser to be attached to such return. Note, that the first $13,000 (or $26,000 if your wife joins in this gift) can be given to him without using up your lifetime gift tax credit amount (now $5 million). So unless the gift is extremely large there will be no gift taxes to be paid, but you still must file the Form 709.
Answer Applies to: Pennsylvania
Replied: 1/26/2011
Givner & Kaye
Givner & Kaye | Bruce Givner
If you give him an undivided 99% interest as a tenant in common, then he owns 99% and - unless he pays fair market value for it - that is a gift.
Answer Applies to: California
Replied: 1/25/2011
Meyer & Yee, LLP
Meyer & Yee, LLP | Kent W. Meyer
This is a part gift part sale. It is a taxable gift but may not be taxable due to your annual exclusion(13-26k) and your lifetime credit of 1 million dollars.
Answer Applies to: California
Replied: 1/25/2011
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