My father has given me and my husband $90,000 to put down on a house. He is living with us also, but isn't on the title. He had to sign a gift letter. Will he have to pay a tax on that? If so, how much would that be? I'm pretty confused with gift taxes. I read that there is a $12,000 limit a year, but a lifetime of $1,000,000. As long as he reports the amount with the IRS will he have to pay anything? When we sell the house, we will be giving his money back.
2007-11-13 06:28:58 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Three useless answers. Do I hear four??
OK, your Dad will have to file a Gift Tax return since the gift exceeds $12,000 to any one person. However the lifetime exclusion means that he will not pay any tax unless he's already used that up.
If he has used it up, he and his wife can each give you and your husband $12,000 each ($48,000 total) right now and $12,000 immediately after the New Year (another $48,000) without incurring any Gift Tax liability. Since that equals more than what he's giving you, you're all set.
But assuming that he's never dipped into his lifetime exclusion then he can give you the whole wad right now and not worry about taxes. He will have to file a Gift Tax return though no tax will be due.
As you probably already know, you will pay no tax at all. The recipient never pays Gift Taxes, only the donor.
2007-11-13 07:07:36 · answer #1 · answered by Bostonian In MO 7 · 2⤊ 0⤋
You can't avoid the Gift Tax filing requirement if you give more than $13,000 to any one recipient in any one tax year. Give more than that and you must file, and once you've exceeded $1,000,000 in your lifetime the tax will start ti kick in. The problem is that it appears that you were a joint owner on the account, with right of survivorship. Effectively that bars you from refusing an inheritance. If you could have done that, no Gift Tax would come in to play. Tip for the future -- don't have anyone as a joint owner on an account except a spouse. Add someone as Payable on Death (POD) and they can refuse it so that it rolls back to the estate. Make them a joint owner and they may lose the luxury of that choice. Overpaying for something won't solve the problem either. The excess is treated as a gift which leaves you in the same bucket of snot. However with the numbers you are talking about it would appear that you are looking at giving each of them $10k and then buying out their equity shares. Since the $10k is less than $13k, you avoid the whole stinking mess of filing Gift Taxes. If it's going to be more than $13k for each of them, give them $13k now and $13k each year until you have completed the gift and you also avoid the whole mess.
2016-04-03 23:02:40 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Yes, your father has incurred a gift tax. Consult a qualified tax professional to get this legally handled. If Dad, rather than just giving you the money, takes a second mortgage on your home after you purchase it, you now have a loan instead of a gift. Dad may then give $12,000 each annually to you and your husband as a gift without incurring a tax. He may 'forgive' that amount annually until the $90,000 is fully forgiven.
2007-11-13 06:38:26 · answer #3 · answered by acermill 7 · 0⤊ 2⤋
The IRS will charge you a gift tax. Your father will not have to pay. Depending on what state you live in, there could be state taxes as well. There is no one time exception with the IRS.
2007-11-13 06:47:47 · answer #4 · answered by Anonymous · 0⤊ 4⤋
No, you are allowed to gift money with no taxes once in your life to each of your immediate family members up to 100,000.00
2007-11-13 06:35:14 · answer #5 · answered by Holly W 3 · 0⤊ 5⤋