Content

• Steps
• Warnings

Gift tax is a federal tax paid on property and given to third parties for less than real market value. A person can transfer their property to another for less than the real market value for medical purposes, charity purposes, to simply simplify the transfer procedure, or give a friend or family member a gift such as a large amount of cash, stocks, bonds or part of real estate.

It is important to note that these tips are country specific (we do not specify which one). Laws in other countries may differ.

Steps

1. 1 You need to know which gifts are tax-free. The federal government does not tax all gifts. Here are the gifts that are tax-free:
   • Gifts given to your wife or husband who is a US citizen.You can transfer an unlimited amount of real estate to your wife or husband as long as he / she is a US citizen.
   • Gifts used for training. Money or property used to pay for college or university tuition is exempt from federal gift tax, provided you pay directly to the educational institution. So instead of just giving, let's say RUR 500,000 (about $ 15.00) 0 as a gift, pay for a year of college. To determine if a particular college or university is an eligible institution for federal gift tax purposes, consult with a qualified accountant or tax attorney.
   • Gifts intended to pay for treatment. Money or property earmarked to pay for medical services is payable directly at the medical facility and is not subject to federal gift tax.
   • Gifts donated to political organizations for use as they see fit. To determine if a gift you have made to a political organization is not taxable, consult a qualified accountant or tax attorney.
   • Gifts donated to charities. Consult with a qualified accountant or tax attorney to determine if a gift you have made to a charity is tax deductible.
2. 2 Limit gifts to an annual limit of RUB 450,000 ($ 13,000) in 2011. You can ignore the annual deduction if you give a gift every year. Then you don't pay tax.
3. 3 Make a gift with your wife / husband. Considering that both of you have a limit on the annual tax payment, you can double the amount of the gift together. For example, in 2011 you and your wife / husband can give your son 450,000 rubles ($ 13,000). You can donate 450,000 rubles ($ 13,000) to your son, and your wife / husband can also donate 450,000 rubles ($ 13,000). Together this will amount to 900,000 rubles ($ 26,000).
4. 4 Give gifts to your husband and wife. Just as spouses can double the size of a gift if they give it together, you can also double the size of a gift if you give it to a married couple. For example, in 2011 it was possible to give 450,000 rubles ($ 13,000) to a son and 450,000 ($ 13,000) to his wife. Together, this will amount to 900,000 rubles ($ 26,000) without paying tax on the gift.
5. 5 Use your limited life tax exemption. A person can give 17,000 rubles ($ 500,000) of certain gifts, excluding the annual amount and not pay taxes on gifts. If you have exceeded the amount of 17,000 rubles ($ 500,000), then taxes must be paid. If you donate 490,000 rubles ($ 14,000) per year for 5 years, then for 35,000 rubles ($ 1,000) you must pay tax on the gift. Total: you get 175,000 rubles ($ 5,000). You can take advantage of your tax exemption and deduct RUB 35,000 ($ 1,000) from the gift tax. In five years, you are using RUB 175,000 ($ 5,000) out of RUB 17,500,000 ($ 500,000).
6. 6 Trusts are another way that exempts you from paying tax. Some of the more well-known trusts for this purpose are:
   • The GRAT Trust is a financial institution common in the United States to make large gifts to family members and not pay taxes. Such a trust is based on the fact that a certain number of years pass before the child or grandchild can use the funds. Thus, a person takes a wait-and-see attitude in order to take away “wait-and-see property”. Over the course of several years, the person receives payments from the trust annually. It all depends on when the trust account was created: the amount that will be received will be much higher, since the tax does not have to be paid on the full amount. Thus, the entire amount can be transferred to the recipient without paying tax on the gift. For example, if you deposited RUB 35,000,000 ($ 1,000,000) into the trust account, then twice a year you can receive RUB 17,500,000 ($ 500,000) and receive 5%, the amount of RUB 1,750,000 ($ 50,000). If the trust earns 8%, the recipient will receive 1,000,000 rubles ($ 30,000). This will be a tax-free gift.
   • Personal Residence Trust. This is a trust in which a permanent personal residence is registered.The trust provision stipulates that the recipient must wait a certain number of years before being able to take over the house. The same scheme works here as in the previous trust. The value of the gift is not calculated at the time the trust account is created. The home will be assessed before the recipient receives it, and the gift tax is not deducted for the valuation determination. For example, the House for the creation of a trust account is valued at 1,750,000 rubles ($ 50,000). You are making a personal trust for 5 years. If, after 5 years, the price of the house rises to 2,450,000 rubles ($ 70,000), then the recipient receives a gift of 700,000 rubles ($ 20,000) without paying the gift tax.
   • Dynastic trust. Also similar to a GRAT trust: it reduces or completely eliminates the tax on the gift in the same way. Gift value calculations are not calculated during the creation of the trust account. A dynastic trust is designed for several generations, taking into account the interests and income of several successful generations without paying tax on the gift. For example, you could set up a RUB 1,75,000,000 ($ 5,000,000) trust account and receive RUB 1,750,000 ($ 50,000) annually for the rest of your life and transfer this trust to your grandchildren, who will receive the remainder.
7. 7 The transfer of property is carried out at the real market value of the property. The real market value is defined as the price at which the property will change hands between the buyer and the seller, without forcing anyone to buy or sell, but based only on sufficient knowledge of both of the relevant facts. Relevant facts include how well the item is performing, how old it is, and whether it has been damaged. When a property is transferred at fair market value, it is exempt from gift tax as it is considered an act of sale and not a gift. For example, if your car costs 35,000 rubles ($ 10,000), and you give it to your child in exchange for 350,000 rubles ($ 10,000), then you are actually selling the car, not giving it away. However, if you give the car to a child for 175,000 rubles ($ 5,000) in cash, you are giving the difference between the cost of the car of 350,000 rubles ($ 10,000) and 175,000 rubles ($ 5,000) in cash that you received from the child, that is, 175 000 rubles ($ 5,000) you give your child.
8. 8 Give a gift as an inheritance after your death. In 2011, federal property taxes do not levy property if it is valued at less than RUB 175,000,000 ($ 5,000,000). If federal property taxes are not levied, accordingly, the inheritance will be given cheaper than if it was a gift. State inheritance taxes generally have a higher tax exemption rate than federal gift taxes. For example, in Indiana, a child, grandson, or parent of a deceased person can inherit RUB 3,500,000 ($ 100,000) without paying inheritance tax.

Warnings

• The examples provided here are for informational purposes only and the numbers do not represent real interest rates, house prices, or the like.
• By exercising your right to a gift tax credit, you can lower the tax on your property, and taxes on your property will be paid upon your death. You should always seek the advice of a qualified accountant before making large gifts.
• Gift recipients may be required to pay taxes if the value of the gift rises. For example, if you buy shares for 35,000 rubles ($ 1,000) this year, and give them to your daughter for 10 years, then if you sell them after a certain number of years for 350,000 rubles ($ 10,000), she may be forced to pay taxes for the entire increased capital of 315,000 rubles ($ 9,000). You should consult with a tax or real estate attorney to find out if you are the recipient of a gift, property, or funds other than cash.