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Important IRS Update: Significant Interest Penalty Increase for Tax Underpayments
The Internal Revenue Service (IRS) has recently announced a critical change that could significantly impact taxpayers who underpay their taxes. This update is particularly relevant as we approach the next tax filing season. Previously, the IRS charged a 3% interest penalty on estimated tax underpayments. However, this rate has now been increased to a substantial
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Will Inflation Hurt Stock Returns? Not Necessarily
Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks. A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns. Since 1993, one-year returns on
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Maximize Your Charitable Impact with These Four Strategies
As the year draws to a close, it’s a perfect opportunity to rethink how you give to charity. This is important for managing how much tax you pay and how much help reaches those in need. Here are four effective strategies: Need Guidance? Reach Out to Us! These strategies are just a starting point. There
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The Financial and Legal Implications of Adding a Name to a Property Deed
When it comes to owning property, you may want to share that responsibility or privilege with someone else, perhaps a family member or a friend. Adding someone’s name to the title of your property may seem like a straightforward process, but there are various tax and legal consequences you should be aware of. In this article, we will explore these implications and shed light on what to consider before making such a significant move.
For a more detailed discussion, we recommend this insightful article by SmartAsset.
Tax Implications
Gift Tax
One immediate concern when adding someone’s name to your property deed is the gift tax. If the value of the share of property you are giving exceeds the annual gift tax exclusion ($15,000 as of 2022), you may be responsible for paying gift tax or utilizing part of your lifetime exemption.
Capital Gains Tax
When the person whose name you’ve added decides to sell the property in the future, they might be subject to capital gains tax. The tax rate will depend on the difference between the selling price and their basis in the property, which is often the original purchase price.
Legal Implications
Property Ownership Structure
Adding a name to a deed changes the structure of property ownership. Different ownership structures, like joint tenancy or tenants in common, come with distinct rights and responsibilities. Make sure you understand these differences before taking any action.
Liability
Once someone else’s name is added to the deed, they also become responsible for the property, including its debts and liabilities. If the property incurs debt or faces a legal action, both parties will be accountable.
Future Sale or Transfer
Adding another name can also complicate matters if you decide to sell or transfer the property in the future. Both parties must agree to the sale or transfer, and disagreements can lead to legal issues.
Conclusion
Adding a name to a property deed is a decision that should not be taken lightly. It has both tax and legal implications that can impact your financial situation and future planning. Always consult a tax advisor and legal expert before making any changes to property ownership.
If you’re considering adding someone’s name to your property deed and need professional advice, Shah Total Planning is here to help. Our team of experts in wealth management and law can guide you through the tax and legal complexities to make the best decision for your situation. Don’t hesitate to reach out to us for a personalized consultation.
Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Always consult with a qualified professional for specific advice tailored to your individual needs.