Avoiding Higher PropertyTaxes On Second Home

[olimac]

What is the name of your state? SC

What are the gift tax consequences of transferring ownership of a second home to my 21-year old college student daughter. She claims this residence as her principle address but resides in an apartment near her campus. Her mother and sister (away college student) claim home as residence as well. I do not claim this property as my principle residence. I still have a mortgage on it. I'm doing this to avoid the higher property tax assessment. I can only have one principle residence qualify for lower property tax assessment. I already understand the liability ramifications ie. loss of control, someone suing her, etc.

[Snipes5]

Any time you try to monkey around like this to "avoid" taxes, you wind up causing more trouble than it's worth.

If you gift this property to your daughter, you will be required to file a gift tax return, and use up some of your unified tax credit.

Your daughter's only basis in the house will be what you paid for it, and depending on how long ago you purchased it, this could severely handicap her financially when it is time to sell it.

You may also adversely affect her finances as far as college financial aid is concerned.

These are just a few things I can think of off the top of my head. You should really consult with a financial advisor, enrolled agent, CPA or attorney before doing anything.

What you are contemplating will have far-reaching consequences.

Snipes

[olimac]

SC

Thanks for the response. I don't really think I'm trying to avoid taxes but rather do what I believe is fair given the situation. The home in question is occupied by my estranged wife and two children; if the home is in their names and is a primary residence, the the home is eligible for the lower property tax assesment. I think it is pefectly fair for me to do this. I'm not renting the house out; I pay the mortgage, thus I should not have to pay higher property taxes on it. Isn't this the same situation a divorcing couple would do if one were to remain with the home: quit claim ownership to the other.

Per your recommendation I will consult further with the professionals.