DEAR BOB: Who pays the taxes on a once-in-a-lifetime, $1 million property gift? –John L.
DEAR JOHN: Nobody! When an individual donor gives away up to $1 million in cash or other assets, he or she must file a federal gift tax return with the IRS. But no federal gift tax will be due if the donor has not previously given away more than $1 million tax-free under the $1 million federal gift tax exemption.
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When the donor dies, the $1 million lifetime gift tax exemption used will be subtracted from the decedent’s federal estate tax exemption (currently $2 million for decedents dying in 2007 or 2008). For full details, please consult your tax adviser.
SEVERE TREE TRIMMING PROVED COSTLY
DEAR BOB: For several years I tried to get my neighbor to trim her big, old tree that overhung my property line. She refused to do anything. Then I read in your column about 18 months ago that I had the legal right to trim overhanging trees back to the boundary. That’s what I did. I had an arborist do the work. It cost me about $1,000. However, within about six months the neighbor’s tree died. She blamed my tree trimming, but I think the tree died of old age. She took me to local small claims court and the judge awarded her $2,000. Should I appeal? –Henry H.
DEAR HENRY: As I have frequently warned when trimming a neighbor’s tree overhanging your property, you must be very careful not to trim it so severely that the tree dies. If the arborist you hired knew what he was doing, the tree should not have been trimmed so severely that it died.
Anything can happen in small claims court. If you feel the judge ruled against you unfairly and if the arborist will testify on your behalf, you might want to appeal. The choice is up to you.
HOME BUILDER’S GOOD FAITH ESTIMATE IS NOT A MORTGAGE PROMISE
DEAR BOB: Can a mortgage lender pretend on a good faith estimate that it will offer you a particular loan to entice you to sign a purchase contract and pay a deposit to a home builder? That’s what happened to us. We were offered a 40-year fixed-interest-rate mortgage at 6.2 percent interest with a $1,595 monthly payment. So we signed the contract and gave the home builder a $5,380 deposit. However, the mortgage company then tried offering us different loans, none as good as the original mortgage outlined on the good faith estimate. My wife and I didn’t earn our 800 FICO (Fair Isaac Corp.) score by making bad choices so we walked away. Now the home builder refuses to refund our deposit. What can we do? –Miguel T.
DEAR MIGUEL: The answer depends on the wording of the home purchase contract. The mortgage lender’s good faith estimate was not a promise of a specific home loan. However, if your purchase offer was contingent on getting that loan, and if it proves to be unavailable, then you are clearly entitled to your deposit refund.
The new Robert Bruss special report, “Pros and Cons of Livings Trusts to Avoid Conservatorship, Probate Costs and Delays for Your Heirs,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).