In: Accounting
In March 2020, Ana buys a house worth $440,000 in Florida. She
puts 5% down and...
- In March 2020, Ana buys a house worth $440,000 in Florida. She
puts 5% down and takes out a mortgage loan for the rest of the
balance. In May 2020, Ana decides to add John to the deed of the
house as joint owner. John gives Ana $18,000 to help her recoup
some of the costs of the purchase and agrees to pay half of the
mortgage, but, is not placed on the mortgage loan.
For this question, assume that both
John and Ana live in and are residents of Florida, and are not
married. In addition, John and Ana have no relation to each other
except that they are boyfriend and girlfriend and have not lived
together before, nor do they have any children together. After the
transaction is effected, they plan to live together in the house
purchased by Ana. However, there are no immediate plans to get
married.
Explain the tax implications of this
transaction.
Please provide as much information as
possible to help me determine the reason behind your answer and so
that I may give you partial credit. Some questions to consider:
- Is there a gift tax associated with this transaction?
- Who pays the gift tax?
- What other tax consequences are there to consider (deed
transfer tax, title transfer exemptions, shared property tax
responsibilities, etc.)?
- Does the mortgage impact the amount of the gift?
- If there are tax implications, when are they required to pay
them (i.e., deed transfer tax, gift tax, real property taxes,
etc.)?
- Same as above, except John was not providing Ana $18,000.
However, he did agree to pay half the mortgage with her. Does this
change anything?