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