This year Don and his son purchased real estate for an investment. The price of the property was $500,000, and the title named Don and his son as joint tenants with the right of survivorship. Don provided $320,000 of the purchase price and his son provided the remaining $180,000. Has Don made a taxable gift and, if so, in what amount?

Question

Quizplus · Accepted Answer

As joint tenants with the right of survivorship, each joint tenant is presumed to have an equal share in the property unless the title specifies otherwise. Thus, Don and his son each own a 50% interest in the property. Don's contribution of $320,000 exceeds his 50% interest in the property by $70,000 ($320,000 - 50% x $500,000 = $70,000). This excess contribution constitutes a gift from Don to his son. Therefore, Don has made a taxable gift of $70,000, which is less than the annual exclusion amount ($15,000 in 2020), so no gift tax is due.

This Year Don and His Son Purchased Real Estate for an Investment