I'm gettting married and for a wedding present my Grandfather would like to give me a large down payment for a house. How does it work in regards to being taxed?
2006-12-28 00:37:13 · 11 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
If your grandfather is married, he may wish to give the gift jointly with his spouse, and to give it (or part of it) jointly to you and your spouse. That way $48.000 of the gift is absolutely free of gift tax.
For the rest, he needs to file for 709 and claim part of his lifetime exemption from gift and estate tax.
http://www.irs.gov/businesses/small/article/0,,id=164878,00.html (latest info from IRS)
http://www.irs.gov/pub/irs-pdf/f709.pdf (PDF, Form 709)
If he spreads the gift over two years -- and gives you $48,000 by Dec. 31, 2006 and the rest on Jan. 2, 2006 or later -- then the tax-free amount is $96,000 (or half that, if your grandfather is widowed or divorced).
As the checks must be deposited in the relevant year, it's best if he wires the funds to your account for the 2006 part. Or gets a gift check or teller's check that will be debited to his account right away.
There will be no tax to pay.
My very best wishes to you on your wedding. And not to add a depressing thought, you might want to draft a brief letter to your fiancé(e) by way of a pre-nup just to acknowledge the source of the money and who should be credited with it in case of marital breakdown. Or, if you live in California or another community property state, whether it shall be deemed community or separate property, and in the latter case, whose property it is. Your fiancé(e) would then sign the letter too with the notation "agreed", and the date. (I say this because my son's ex, whose medical school tuition he had paid for, divorced him as soon as she graduated and demanded and got 1/3 the value of his house without any credit for her education expenses. And now, as a surgeon, she is earning twice what he is.)
2006-12-28 00:52:05 · answer #1 · answered by Anonymous · 4⤊ 0⤋
He'd could report a contemporary tax return. He does no longer unavoidably could pay any tax as long as he hasn't already used up his lifetime exemption, yet while he would not, it ought to influence the tax on his sources while he dies if he has greater sources than however the decrease is then. that's for federal - i do no longer understand if there could be any state tax implications in CA. lots of the solutions above are in part or thoroughly incorrect, via the way - even some with some "thumbs ups" are incorrect. If any tax is owed, your dad will owe it, no longer you. He would provide you, or as a lot of people as he desires to, as much as $12K a 12 months with out having to record it. And final I appeared, CA actual had an earnings tax, yet it may very no longer likely word to this present out of your dad.
2016-10-19 02:11:20 · answer #2 · answered by goodgion 4 · 0⤊ 0⤋
Your grandfather will be subject to the gift tax. He should probably just buy you the house (or co-sign) and then leave it to you when he dies. this would solve the gift tax problem for him. You can pretty must pass up to 1,000,000 (it may have gone up) in your estate before you run into problems. But I am rusty on my Gift and Estate tax law. You should consult a gift and estate professional or an attorney before you do anything.
2006-12-28 04:09:56 · answer #3 · answered by Dave 3 · 0⤊ 0⤋
Good for you.
Gifts are never taxable to the receiver.
A gift tax return must be filed by the giver for a large gift like that but no gift tax may be owed. Your grandfather should check with his accountant.
2006-12-28 00:41:37 · answer #4 · answered by Wayne Z 7 · 1⤊ 0⤋
One consideration that has not been discussed is the state in which you live. Some states do have gift taxes. You may wish to consult your state taxing authority's web site.
2006-12-28 01:55:02 · answer #5 · answered by ? 6 · 0⤊ 0⤋
NONE ... IF... it is couched as a "lifetime gift". Up to a million dollars can be given away this way... in the United States. Be sure to consult a tax professional to be absolutely certain. Nice present!!!
2006-12-28 00:43:41 · answer #6 · answered by Paul H 6 · 1⤊ 0⤋
Wow!! ... Does he wants to adopt a son??? :D
In general it is subject to a gift tax that GF has to pay but most likely he will be able to claim against 1mil. lifetime limit.
There are ways to avoid gift tax or estate tax if he don't qualify for life time limit.
2006-12-28 00:58:13 · answer #7 · answered by Ted 4 · 0⤊ 0⤋
It's depend on which state you are. But any way he can claim that against his life time limit. There will no tac burden on you.
But you should tax advice from your tax consultant.
2006-12-28 03:04:15 · answer #8 · answered by us tax 1 · 0⤊ 0⤋
dont buy a large house, and gift tax will be in effect
2006-12-28 03:08:35 · answer #9 · answered by Anonymous · 0⤊ 0⤋
The first 12,000 can be tax free as a gift. The rest will be taxed.
2006-12-28 00:40:06 · answer #10 · answered by capnemo 5 · 0⤊ 2⤋