Wierd Situation
I am selling a home to my dad. The catch is 2 years ago my dad secured the loan for me under his name. I have made all the payments on the home and now I am selling it. The value on the house has gone up $130,000. My dad wants to buy the house from me even though the house and mortgage is in his name. How can we work this sale, so to speak and avoid paying capital gains? 
He already owns the home, so he can just move in without the sale.
You could apply a second mortgage against the home for the value of what he will pay you out, thereby delaying your gains.
Or you could have him gift you $11,000 per year til it's paid off
A better option is to have him gift you the entire amount. Each individual has a lifetime gift tax exemption of 1mil, which goes up to 1.5 mil in 2004. If he gifts it to you then there is zero tax.
If he gifts me the entire amount then don't I have to pay a tax on the gifted amount?
The lifetime exemption is true, but if you start to use it, you are penalized against it in the future in an estate situation for example.
Using the Annual gift tax exclusion does not apply against your total.
The main things to consider are, when do you want the money and how will that affect you when it comes time for your father's estate planning
I might also add that the annual exclusion is per person, per donee.
So, your father can gift $11,000 to you, your wife, your son and your daughter in a year, and so can your mother. That makes for a lot of gifts (ie cash) in one year
Thgen do any of the people who recieve these gifts have to pay any taxes on the gifts?
NO
That's why it's called an annual gift tax EXCLUSION....
Do a google search on those words and read up on it, then ask an accountant about it as well.
The gift tax is an extrememly powerful way to transfer wealth, and should be a consideration for anyone looking to protect their assets from taxes.
Quote:A better option is to have him gift you the entire amount. Each individual has a lifetime gift tax exemption of 1mil, which goes up to 1.5 mil in 2004. If he gifts it to you then there is zero tax.
telemon,
You are correct with respect to federal income taxes and federal gift taxes. The first $11K of a gift is excluded from gift taxes. Amounts that exceed the $11K annual exclusion are exempted from gift taxes, until the total amount of exempted gifts during the individual's lifetime exceeds $1MM. After that, there is no further exemption, and a federal gift tax is due to the IRS.
There may be different gift exemption threshholds for state taxes. For example, in NC the state lifetime gift exemption is $100,000 even though the federal gift tax exemption is 10 times greater. A NC taxpayer can gift $100K tax free, but the state will levy its own gift tax on any amount that exceeds $100K.
To the others who ask who pays the gift tax: Gift taxes, if due, are paid by the giver, not by the receiver.
Holy Moly You Guys -
this is a tax question that should be asked of a CPA who specializes in estate/gift tax. The Whole Picture should be looked at and considered for both dad and son. It's definitely worth a couple hundred dollars to get a quality answer to this large question.