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Message
Kids Buying First Home
Posted on 10/4/23 at 2:53 pm
Posted on 10/4/23 at 2:53 pm
My daughter and her husband are buying their first home. While I'd like for them to wait a bit, they are anxious to get going. Anyway, I plan on gifting them a down payment. I assume that this would fall under the IRS gift tax rules, correct? This is what I've found:
Does this mean that I can only give them $17K before it starts counting against their income taxes?
quote:
The IRS rules on gifting money are laid out in a piece of legislation called the “gift tax.” For 2023, the gift tax exclusion has been set at $17,000 per person per year for an individual filer. (For gifts made in 2022, the threshold is $16,000.)
Does this mean that I can only give them $17K before it starts counting against their income taxes?
13
Posted on 10/4/23 at 2:56 pm to Aubie Spr96
Have them buy in January and they can have over $34,000.
(Also, I'm not sure how gifting is considered when there are 2 parents. You may be able to double-dip and bump that to $68,000 in January).
(Also, I'm not sure how gifting is considered when there are 2 parents. You may be able to double-dip and bump that to $68,000 in January).
Posted on 10/4/23 at 2:57 pm to Aubie Spr96
I think you could give each of them 17k so 34k total. Were you going to give them more than 34k? Can they hold off till Jan? 34k this year and 34k next.
Posted on 10/4/23 at 2:59 pm to Aubie Spr96
You and your wife can give each spouse 17k. So 17k x 4. Buy going above the 17k doesn't mean anything unless you think you'll die worth more than $23 million
Posted on 10/4/23 at 3:25 pm to TheOcean
Thanks. Figured $20K was the appropriate wedding present.
Posted on 10/4/23 at 3:32 pm to Aubie Spr96
I am not a CPA or a tax expert.
But I think you are all wrong. I think it's WAY higher than that, like millions.
Lifetime Exemption: In addition to the annual exclusion, there is a lifetime gift tax exemption. This is the total amount of taxable gifts a person can make over their lifetime without paying gift tax. As of September 2021, the lifetime exemption was $11.7 million per person (or $23.4 million for a married couple), but this amount can change due to changes in tax laws or regulations.
Edit -- TheOcean touched on it above. Sorry Ocean.
But I think you are all wrong. I think it's WAY higher than that, like millions.
Lifetime Exemption: In addition to the annual exclusion, there is a lifetime gift tax exemption. This is the total amount of taxable gifts a person can make over their lifetime without paying gift tax. As of September 2021, the lifetime exemption was $11.7 million per person (or $23.4 million for a married couple), but this amount can change due to changes in tax laws or regulations.
Edit -- TheOcean touched on it above. Sorry Ocean.
This post was edited on 10/4/23 at 3:34 pm
Posted on 10/4/23 at 3:47 pm to Aubie Spr96
Banks typically ask for bank statements and will probably question them about the gift deposit if it’s right before they apply for the loan. You may be required to provide a letter or sign something stating you’re their parent and you gave them it as a gift and not a loan
Posted on 10/4/23 at 4:18 pm to Aubie Spr96
quote:
Does this mean that I can only give them $17K before it starts counting against their income taxes?
The gift tax is paid by the giver. You would only owe taxes once you exceed the lifetime limit of multi millions.
Posted on 10/4/23 at 4:21 pm to whiskey over ice
quote:
right before
This....I think it's 90 days that the cash needs to sit before it's no longer flagged by the mortgage broker
Posted on 10/4/23 at 4:26 pm to Big_Sur
quote:
This....I think it's 90 days that the cash needs to sit before it's no longer flagged by the mortgage broker
The flag means that the source needs to be documented. It isn't a big deal when you show a cleared check from the parents. That and a letter confirming that it is not a loan.
And technically, anything can be flagged if underwriting becomes aware of it (5 months ago, 10 months ago, etc..). They are just dotting their eyes and crossing their Ts.
Posted on 10/4/23 at 4:43 pm to meansonny
quote:
Also, I'm not sure how gifting is considered when there are 2 parents. You may be able to double-dip and bump that to $68,000 in January).
I think this is correct.
You can give each of them 17k and your wife can give them 17 k too.
So 68k.
I’d talk to an accountant to see if there are any special rules you could use in this particular situation.
Posted on 10/4/23 at 5:15 pm to Big_Sur
You have to document that it's a gift and doesn't need to be repaid. The IRS unexpectedly kicked us in the nuts a couple of weeks before we closed, and we had to accept a gift from the in laws to close on time. That was 2014, though, and not all bank risk departments act the same.
Posted on 10/4/23 at 6:09 pm to whiskey over ice
quote:
Banks typically ask for bank statements and will probably question them about the gift deposit if it’s right before they apply for the loan. You may be required to provide a letter or sign something stating you’re their parent and you gave them it as a gift and not a loan
This is exactly what they sent me today.
Posted on 10/4/23 at 7:19 pm to Aubie Spr96
It's $17,000 annually per person. That means you can gift your daughter $17,000 and her husband $17,000.
And if you are married your wife can also give each of them $17,000 for a total gift of $68,000 for 2023.
And if you are married your wife can also give each of them $17,000 for a total gift of $68,000 for 2023.
Posted on 10/4/23 at 7:25 pm to Aubie Spr96
Gifts are not subject to income tax. The annual exclusion is $17k per person going up to $18k per person. Amount gifted over that in a year is a taxable gift that requires a gift tax return to be filed. Form 709. No gift tax will be due because you will use your lifetime exemption, currently $12.92M, this year to offset that tax. It’s more of an accounting.
Posted on 10/4/23 at 7:30 pm to meansonny
quote:
(Also, I'm not sure how gifting is considered when there are 2 parents. You may be able to double-dip and bump that to $68,000 in January).
I had a meeting with my CPA yesterday and he said that you can double dip using your spouse.
Posted on 10/4/23 at 9:36 pm to Mariner
You cats all really gifting in excess of $12M over your life? Your children are lucky individuals.
Posted on 10/5/23 at 7:12 am to LSURussian
quote:IDK why this got a DV.
It's $17,000 annually per person. That means you can gift your daughter $17,000 and her husband $17,000.
And if you are married your wife can also give each of them $17,000 for a total gift of $68,000 for 2023
It is correct.
We did this about a year ago.
An interesting nuance was their loan company contacted us, and had us fill out paperwork establishing origination of the gift, and ensuring the money was being given away, and did not constitute some sort of second mortgage.
This post was edited on 10/5/23 at 8:04 am
Posted on 10/5/23 at 7:35 am to Sherman Klump
Not at all.
Posted on 10/5/23 at 8:07 am to makersmark1
quote:We wrote separate checks for each gift (IRCC, allowance was for $16K each at that point)
I’d talk to an accountant to see if there are any special rules you could use in this particular situation.
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