Edison Real Estate Lawyer Reveals: The $15 Million Gift Tax Secret That Changes Everything for NJ Property Owners in 2025

Here's the game-changing news that's flying under the radar: On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law, permanently raising the federal gift and estate tax exemption to $15 million per person starting January 1, 2026. For married couples, that's a combined $30 million exemption: and unlike previous tax changes, this one has no expiration date.

If you own property in New Jersey, this isn't just another tax update you can ignore. This represents the most significant wealth transfer opportunity in decades, and smart property owners are already adjusting their estate planning strategies to take advantage.

What's Actually Changing (And Why It Matters to You)

Let's break down what this means in real terms. Right now in 2025, you can gift up to $13.99 million during your lifetime without owing federal gift tax. Starting next year, that number jumps to $15 million: and stays there permanently.

But here's what most people miss: New Jersey makes this even sweeter. Our state doesn't impose a gift tax, and we repealed our state estate tax back in 2018. That means NJ property owners only deal with federal rules when transferring real estate or other assets.

The Annual Gift Rules for 2025 (Your Starting Point)

Before we dive into the big numbers, let's cover your immediate opportunities. For 2025, you can give $19,000 per person, per year without any reporting requirements or tax consequences. This is up from $18,000 in 2024.

If you're married, you and your spouse can combine your annual exclusions. That means you can jointly gift $38,000 to each child, grandchild, or anyone else without touching your lifetime exemption.

Quick example: Say you want to help your three adult children with down payments. You and your spouse can give each child $38,000 this year: that's $114,000 total: with zero tax implications and zero paperwork.

The Lifetime Exemption: Your Real Power Tool

Here's where property owners get excited. The annual gift limits are just the beginning. If you want to transfer more than $19,000 to someone in a single year, you don't immediately owe taxes. Instead, the excess counts against your lifetime exemption.

Let's say you transfer a $500,000 rental property to your daughter in 2025. You'd use $481,000 of your lifetime exemption ($500,000 minus the $19,000 annual exclusion). You still have $13.5 million left in your lifetime exemption: and remember, that's jumping to $15 million in 2026.

You only owe actual gift tax once you've burned through your entire lifetime exemption. Even then, the tax rate maxes out at 40% on amounts above the exemption.

Why the Permanent Nature Changes Everything

Previous estate planning felt like a race against time. The exemption was scheduled to drop to around $7 million per person in 2026 under sunset provisions from the 2017 Tax Cuts and Jobs Act. Estate planners were pushing clients into rushed decisions and complicated irrevocable trusts.

That pressure is gone. The new $15 million exemption is permanent and will increase with inflation starting in 2027. This gives you breathing room to make thoughtful, strategic decisions about your property and wealth transfer plans.

Strategic Opportunities for NJ Property Owners

Multi-Generational Planning: With $15 million (or $30 million for couples) in permanent exemption space, you can structure long-term transfers that benefit children and grandchildren without the rush.

Property Appreciation Strategy: When you gift property, any future appreciation happens outside your taxable estate. If you transfer a $2 million commercial property today that grows to $5 million by the time you pass away, that extra $3 million in growth avoids estate tax entirely.

Family Business Succession: Own rental properties or a real estate business? The higher exemption creates more flexibility for transferring ownership interests to the next generation while retaining some control.

What About Property in Other States?

Here's a crucial detail many miss: while New Jersey doesn't impose estate or gift taxes, 12 states plus DC still do. If you own property in states like New York, Connecticut, or Massachusetts, you might face additional state-level estate taxes even with the federal exemption protection.

The good news? Your New Jersey residence gives you a significant advantage in overall tax planning compared to property owners in high-tax states.

Action Steps for Property Owners Right Now

Review Your Current Estate Plan: If your will or trust documents reference the old exemption amounts or include outdated tax planning strategies, it's time for an update.

Consider Timing: You have flexibility now. Large transfers don't need to happen before year-end 2025 like they did under the old sunset provisions.

Document Your Property Values: If you're planning future transfers, get current appraisals. This establishes baseline values for gift tax purposes and helps track appreciation.

Evaluate Family Dynamics: With more exemption space available, you might reconsider which properties or what percentage ownership makes sense to transfer and when.

The Fine Print You Need to Know

Remember that gift and estate tax exemptions are connected. Lifetime gifts that exceed the annual exclusion reduce what you can pass estate-tax-free at death. But this isn't necessarily bad: it's strategic. You're essentially choosing whether to transfer wealth now (and remove future appreciation from your estate) or later.

Also, don't forget about step-up in basis rules. Inherited property gets a "stepped-up basis" to fair market value at death, which can eliminate capital gains taxes for your heirs. Gifted property doesn't get this benefit: your heirs inherit your original purchase price as their basis.

Common Mistakes to Avoid

Don't Rush Into Irrevocable Structures: The permanent exemption means you have time to consider all options. Irrevocable trusts still have their place, but they're not the urgent necessity they once were.

Don't Forget State Property Law: New Jersey has specific requirements for real estate transfers. Make sure your gifting strategy complies with local recording requirements and doesn't create unintended legal issues.

Don't Ignore Annual Exclusions: Even with the large lifetime exemption, maximizing annual exclusions remains tax-efficient. Why use your lifetime exemption when you don't have to?

Looking Ahead: Planning in the New Reality

This permanent $15 million exemption creates a fundamentally different planning environment. Instead of racing against sunset deadlines, you can focus on what actually makes sense for your family's financial future.

For most New Jersey property owners, this change means you probably don't need to worry about federal estate taxes at all. That shifts the focus from tax minimization to other priorities: maintaining family harmony, ensuring proper property management, and creating clear succession plans.

The key is understanding that while the tax pressure is off, smart planning is still essential. The difference is you now have the luxury of time to get it right.

Want to explore how these changes affect your specific property holdings and family situation? The new tax landscape creates opportunities, but every family's optimal strategy will be different. Let's review your current plan and make sure you're positioned to take full advantage of these permanent changes.