Stop Taxing Your Kids

20 Jul 2022 · 1 min

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0:42

In this brief advisory video, the speaker warns parents and adult children about a common tax mistake: transferring a home to a child at below‑market value. Such a transfer creates a new, lower tax basis for the child, which can trigger a large capital‑gains tax if the child later sells the property. The speaker explains that the tax consequence can be avoided by passing the home through a will or a trust, which allows the child to inherit the parent’s original tax basis and sell the house without incurring capital‑gains tax. The message is framed as a call to both parents and children to stop this unnecessary taxation and to keep the IRS out of their family affairs.

Chapters

Do you have a child? Do you have a parent? If either of those things are true, listen to what I'm about to tell you. Parents, stop putting your children in the position where they're going to have to pay exorbitant capital gains tax. Children, stop letting your parents do it. When you give a child a home or sell it to them at below market value, you are putting that child in a position where they're going to have to pay capital gains tax if they try to sell it. You can totally avoid this by giving your home to them in your will or your trust. When it's done that way, the child gets the parent's tax basis, they can go out and immediately sell that home for no capital gains tax. Stop unnecessarily taxing your kids. Kids, stop letting them do it. Follow me to keep the IRS out of your business.