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

When property is purchased jointly with the right of survivorship, the presumption is that each owner contributed an equal portion of the purchase price. However, this presumption can be rebutted by evidence to the contrary. Here, Don provided $320,000 out of the $500,000 purchase price, or 64% of the total. Therefore, he has made a gift to his son of $55,000 (the difference between his contribution and his proportional ownership interest). This gift is within the annual gift tax exclusion amount, so no gift tax is due.

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