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3 Ways to Pass Your Texas Property to Your Children Tax-Free

Passing your Texas property down to your children is a great way to help secure your family’s financial future but it can also be complicated, especially when trying to pass it along tax-free. Fortunately, there are a few different ways to successfully do this, depending on how and when you want your children to receive the home. In this blog, we will explain three different ways to pass your Texas property to your children while avoiding various tax consequences.

1. Gift Your Home

One way to pass your property to your children during your lifetime is in the form of a gift. This property is gifted in real-time, instead of it transferring over after death. As of 2024, when you gift property valued over 18,000 dollars in any one year, you are required to file a gift tax form. However, this doesn’t mean you are required to pay gift taxes. The purpose of the gift tax form is so the government can keep track of your lifetime gift. Taxes will only be a factor if you pass the federal gift limit of $13.61 million. Any amount above that number will be taxed. This is also known as the lifetime gift exemption.

2. Put Your Home into a Trust

By putting your home into a trust, you can specifically transfer your property to your children. To do this, you will want to put your property in an irrevocable trust and name your children as beneficiaries. The property will no longer be your estate when you pass, meaning your estate will not have to pay any federal estate taxes when transferred to your children.

One thing to note is that once you place your property into an irrevocable trust, these assets will be permanent. You can no longer remove or change beneficiaries and can no longer change the agreement. So, you will want to be sure to speak to a professional before making this decision. For more information, consult with an estate planning attorney to help create a customized estate plan that meets your needs.

3. Leave Your Home in Your Will

One of the least complicated ways to give your property to your children is by leaving it to them in your will. Texas does not impose an estate tax, and as long as you stay below the lifetime gift limit of $13.61 million, your estate will not have to pay federal estate taxes either. In addition, when your children inherit your property, it will reduce the amount of capital gains taxes they will have to pay if they decide to sell. For more information about inheriting property in Texas, read our blog here: https://johnsonandstarr.com/inheriting-property-in-texas-everything-you-need-to-know/

Want to Pass Along Your Property, but Have Delinquent Property Taxes?

If you have delinquent property taxes but want to pass your property to your children tax-free, you will want to pay off your property taxes immediately. The longer you wait to pay off your taxes, the more you will have to pay in interest, penalties, and fees as they accrue over time. The last thing you want to do is leave your property behind for your children saddled with a high property tax bill.

If you are concerned you won’t be able to pay off your delinquent property taxes on your own, don’t worry! Johnson & Starr can help. Contact us today to speak to one of our licensed loan officers, who will assist you with one of our property tax loans and help answer any of your questions.