Question

The property taxes on a house ttim gave his house in another city to his sister. he had to pay taxes to the government on this transfer. what type of tax did the government levy?

1) estate tax
2) excise tax
3) gift tax
4) property tax
5) sales tax

Answer 1

The tax levied by the government on Tim's transfer of his house to his sister is the gift tax, which is designed to prevent evasion of estate taxes through early wealth transfer.

Step-by-step explanation:

When Tim gave his house to his sister and had to pay taxes to the government on this transfer, the type of tax levied is known as the gift tax. This is a federal tax imposed on the transfer of property from one individual to another while the giver is still alive. The primary intention behind the gift tax is to prevent individuals, particularly the wealthy, from avoiding estate taxes by transferring their wealth before death. Unlike property taxes, which are assessed annually based on the value of real estate and used to fund local services, the gift tax applies specifically to the transfer of assets as gifts.