Gifting property to someone other than your spouse in the state of California can have significant tax implications. While California does not have a gift or inheritance tax, the federal government still assesses tax on gifts exceeding $13,000. The process of gifting the property is relatively straightforward. However, you'll want to enlist the help of a good estate planner or tax advisor to ensure you and the person receiving the property are not being heavily penalized by taxes.
Speak with a tax advisor or estate planning attorney about the tax consequences of gifting a piece of real estate. While you are able to gift something of value up to $13,000 per spouse to each beneficiary, you may be able to place the asset in your estate under "future interest," meaning it has no immediate use or value in the gift according to 2010 IRS regulations. Your tax advisor will help you determine if you qualify for this.
Obtain a grant deed from your California County Assessor's Office. A grant deed transfers the property outright and in its entirety.
Fill out the grant deed and have it notarized. Be sure to bring your photo identification with you when having the document notarized.
File the grant deed with the County Recorder's Office.
File Form 709 with your federal tax return. Form 709 is a gift tax form required by all gifts exceeding the annual exclusion of $13,000.
Get the right advice when gifting large pieces of your estate to avoid large tax consequences for you and those receiving the gifts.