Real Estate Gifting in the USA: A Complete Guide to Taxation, Timelines, and Procedures (Florida and New York)

Real estate gifting in the USA is a way to transfer property without selling, but it's important to consider taxes, restrictions, and legal aspects. This article will thoroughly discuss the mechanism of gifting, taxes, costs of registration, and how to avoid issues, with a focus on Florida and New York.

1. What is Real Estate Gifting in the USA?

Gifting (Gift Transfer) is the non-compensatory transfer of real estate to another person.

Key points:
✔ The transaction is formalized through a Deed of Gift.
✔ Gift taxes must be considered (Gift Tax).
✔ For high-value properties, federal taxes may apply.
✔ Non-residents face special tax rules.

2. How is a Gift Deed Processed?

The gifting process involves several steps:

1️⃣ Preparation of documents (deed of gift, property appraisal).
2️⃣ Signing the Deed of Gift in front of a notary.
3️⃣ Registration of the property with the County Recorder.
4️⃣ Payment of possible taxes and fees.
5️⃣ Transfer of property rights to the recipient.

3. What Taxes Apply When Gifting Real Estate?

Federal Gift Tax

In the USA, a gift tax applies, but there is an exemption threshold:

• In 2024, the limit is $18,000 per person per year without taxation.
• If exceeded, the donor must file IRS Form 709.
• The lifetime limit is $13.61 million – if total gifts exceed this limit, a tax of 40% applies on the excess.

State-Specific Gift Taxes

In Florida and New York, there is no local gift tax, but federal laws still apply.

4. What About Taxes for the Gift Recipient?

• The recipient does not pay a gift tax.
• However, when selling the gifted property, the recipient will pay capital gains tax (Capital Gains Tax).
• The tax is calculated based on the original purchase price paid by the donor (not the market value at the time of gifting).

5. Restrictions for Non-Residents Regarding Gifting

🔹 Non-residents of the USA (foreigners) can gift real estate, but there are restrictions:

• The gifting tax limit for non-residents is $60,000.
• Exceeding this limit incurs a tax of 40% on the amount above the limit.
• An alternative option is to gift through a trust or LLC.

6. Gifting Real Estate to Children and Spouse

🔹 Gifting to a spouse

• If the spouse is a U.S. citizen, no tax applies.
• If the spouse is a foreigner, the limit is $185,000 per year (2024).

🔹 Gifting to children

• Subject to the general federal limit ($18,000 per year without taxes).
• If the value exceeds this amount, the $13.61 million lifetime limit applies.

7. Gifting through Trust – How to Avoid Taxes?

✅ Living Trust – allows property transfer without taxes and court fees.
✅ Irrevocable Trust – reduces tax burden but limits ownership rights.
✅ Grantor Retained Interest Trust (GRIT) – allows retention of income from property until full transfer.

8. Alternatives to Gifting: How to Transfer Property Advantageously?

🔹 Sale for Nominal Price ($1) – does not exempt from taxes.
🔹 Transfer via Will – inheritance taxes in New York can reach 16%.
🔹 Transfer via LLC – reduces tax risks for non-residents.

9. Main Costs of Gifting Process

✔ Legal Services – $1,500 – $3,000.
✔ Notary Fees – $50 – $300.
✔ Registration in County Recorder – $100 – $500.
✔ Property Appraisal (if required) – $300 – $700.

10. Common Mistakes in Gifting

🚨 Not accounting for capital gains tax when selling later.
🚨 Errors in filling out Gift Deed – possible disputes.
🚨 Ignoring tax implications for non-residents.
🚨 Direct gifting without trust – risk of losing tax benefits.

Conclusion

Gifting property – a complex process that requires consideration of taxes, legal aspects, and potential risks. In New York and Florida, there is no gift tax, but federal taxation applies. To avoid problems and minimize taxes, it is recommended to use smart strategies – such as setting up a trust, LLC, or splitting payments.

🔹 Need help with gifting? Our experts will help you complete the transaction quickly, safely, and without extra taxes!