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In: Accounting

In March 2020, Ana buys a house worth $440,000 in Florida. She puts 5% down and...

  1. 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:

  1. Is there a gift tax associated with this transaction?
  2. Who pays the gift tax?
  3. What other tax consequences are there to consider (deed transfer tax, title transfer exemptions, shared property tax responsibilities, etc.)?
  4. Does the mortgage impact the amount of the gift?
  5. If there are tax implications, when are they required to pay them (i.e., deed transfer tax, gift tax, real property taxes, etc.)?
  6. 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?

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Expert Solution

Answer:

ekkarill92 answered 1 year ago
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