Q: I am selling my house. I am going to give the profits to my son. Do we have to claim it on our income tax forms ?

A: You will likely have a gift tax reporting issue, and depending on the size of your estate, you might be subject to tax liabilities as the person giving the gift.

That said, depending on the intent and desired timing, there might be more tax-efficient ways to achieve a similar outcome.

It might be worth talking to a tax attorney or CPA.

Best of Luck.

A: According to Publication 525 (2024), Taxable and Nontaxable Income, property one receives as a gift isn't included in his income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. The obligation to the donor is to file Form 709: US Gift (and Generation-Skipping Transfer) Tax Return for any amount exceeding $19,000 in 2025.

A: When you sell your house, the IRS may require you to report the sale on your tax return, depending on the amount of profit you make. If the house was your primary residence for at least two of the last five years, you might qualify for an exclusion of up to $250,000 of gain if you’re single or $500,000 if you’re married filing jointly. This means that if your profit is below these limits, you may not need to include it in your taxable income.

Since you’re giving the profits to your son, the IRS could consider it a gift. In 2024, you can give up to $18,000 per person without triggering the need to file a gift tax return. If the amount exceeds that, you may need to file Form 709, but that doesn’t necessarily mean you’ll owe taxes. The lifetime gift and estate tax exemption is much higher, so unless your total lifetime gifts exceed that limit, no tax is due.

To make sure everything is handled properly, keep records of the sale, your purchase price, and any improvements you made. If there are any concerns about reporting or exclusions, reviewing the IRS guidelines or seeking professional advice can help you avoid surprises.