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Message
re: Kids Buying First Home
Posted on 10/5/23 at 8:33 am to MSTiger33
Posted on 10/5/23 at 8:33 am to MSTiger33
quote:
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.
Not that this pertains to me at all unfortunately, but can someone just give a straight answer?
Is it $17,000 or $12.9M?
Let’s say he wanted to give $50k? All good or no?
3
Posted on 10/5/23 at 8:44 am to PhiTiger1764
All good.
It's two different things. There is an annual exclusion and a lifetime exemption. If you are married then you are fine because you and your wife can each gift $17,000 to your daughter and $17,000 to your son in law and not go over your annual exclusion. If you go over your annual exclusion then you would need to report the overage of the gift on Form 709 and use part of your lifetime exemption.
In reality, there is a slim to zero chance you would get audited if you go over the annual exclusion amount and not file a 709. You would be ok filing a late 709 if it ever came to that.
It's two different things. There is an annual exclusion and a lifetime exemption. If you are married then you are fine because you and your wife can each gift $17,000 to your daughter and $17,000 to your son in law and not go over your annual exclusion. If you go over your annual exclusion then you would need to report the overage of the gift on Form 709 and use part of your lifetime exemption.
In reality, there is a slim to zero chance you would get audited if you go over the annual exclusion amount and not file a 709. You would be ok filing a late 709 if it ever came to that.
This post was edited on 10/5/23 at 8:45 am
Posted on 10/5/23 at 9:27 am 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
The lender will absolutely make them disclose where the money is coming from but it won't be an issue at all
Posted on 10/5/23 at 9:49 am to MSTiger33
Again, this is simply filing the form - there still would be no taxes owed by the giver as you are under the life time exemption, more than likely. So more of a tracking type form.
Let's say in this scenario, you gifted each individual $100,000. That's fine, fill out the form, and submit it. You, as the giver, would still not owe taxes so long as you have not already gifted them in excess of the lifetime exclusion of $13M.
Well, it's partially correct. I think everyone is concerned about how much taxes would be owed on the gift and who would owe it. To answer that succinctly, no taxes would be owed so long as you have not exceeded the lifetime exemption of $13M. If you do exceed the annual limit, file the form, move on. If you do exceed the $13M annual exemption, the giver of the gift would be responsible to pick up the tax bill - not the kids.
Let's say in this scenario, you gifted each individual $100,000. That's fine, fill out the form, and submit it. You, as the giver, would still not owe taxes so long as you have not already gifted them in excess of the lifetime exclusion of $13M.
quote:
IDK why this got a DV.
It is correct.
Well, it's partially correct. I think everyone is concerned about how much taxes would be owed on the gift and who would owe it. To answer that succinctly, no taxes would be owed so long as you have not exceeded the lifetime exemption of $13M. If you do exceed the annual limit, file the form, move on. If you do exceed the $13M annual exemption, the giver of the gift would be responsible to pick up the tax bill - not the kids.
This post was edited on 10/5/23 at 9:54 am
Posted on 10/5/23 at 10:23 am to PhiTiger1764
quote:
Let’s say he wanted to give $50k? All good or no?
All good but the giftor would need to file Form 709 to report $33k to be applied to their lifetime gift exemption.
Posted on 10/5/23 at 3:52 pm to Sherman Klump
quote:I know we're talking Federal Tax, but in some instances there might be state nuances. E.g., estate vs inheritance tax.
Again, this is simply filing the form - there still would be no taxes owed by the giver as you are under the life time exemption, more than likely. So more of a tracking type form.
Let's say in this scenario, you gifted each individual $100,000. That's fine, fill out the form, and submit it. You, as the giver, would still not owe taxes so long as you have not already gifted them in excess of the lifetime exclusion of $13M.
Federal Tax is applied to the estate.
For 2023, you can give up to $17,000 to any number of people each year without having to file a gift tax return or paying gift taxes.
For individual gifts above $17,000, the giver must file a gift tax return. But, no tax is due until the lifetime exclusion is exceeded.
The total amount you can gift during life and/or leave at death exempted from tax (lifetime exclusion) is $12,920,000, $25,840,000 for couples. But the exclusion level gets cut in half in a couple of years unless Congress enacts different law.
For gifts exceeding the lifetime exclusion, the giver/estate is responsible for paying gift/estate tax at up to 40%.
This post was edited on 10/5/23 at 3:56 pm
Posted on 10/5/23 at 9:10 pm to Aubie Spr96
quote:
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:
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?
Make the check out to them both and you can double it
Posted on 10/5/23 at 9:11 pm to Aubie Spr96
quote:
While I'd like for them to wait a bit,
Rates will continue to rise. The sooner the best imo.
Posted on 10/5/23 at 9:24 pm to Aubie Spr96
Write a check for any amount you want. You can lend family money and if they don’t pay it back, so what.
Way overthinking this.
Way overthinking this.
Posted on 10/9/23 at 8:29 pm to rltiger
I thought everyone on this board made 350k. Why the need for a parental gift?.
Posted on 10/10/23 at 5:54 am to PhiTiger1764
quote:
Not that this pertains to me at all unfortunately, but can someone just give a straight answer?
Is it $17,000 or $12.9M?
Let’s say he wanted to give $50k? All good or no?
The $17k is the threshold for reporting to the IRS so they can keep a running tally.
The $12.9 million is the threshold for when the donor has to start paying taxes.
Basically that keeps OT posters from dodging the estate tax by gifting everything to their kids.
This post was edited on 10/10/23 at 5:55 am
Posted on 10/10/23 at 9:00 am to Bestbank Tiger
quote:
Basically that keeps OT posters from dodging the estate tax by gifting everything to their kids.
Posted on 10/10/23 at 9:28 am to Aubie Spr96
quote:No. YOU are liable for gift taxes on any gift you give exceeding $17,000 per person in a tax year. The recipient of the gift doesn't pay the taxes.
Does this mean that I can only give them $17K before it starts counting against their income taxes?
This post was edited on 10/10/23 at 9:31 am
Posted on 10/10/23 at 9:40 am to Aubie Spr96
quote:
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
You are also welcome to note ahead of time with the bank/lender you are working with, that you will be giving gift funds. You can complete a gift fund letter of explanation, AND then wire directly to the title company for closing. We just did this with your exact scenario for a buyer/borrower we lent to. No seasoning requirement/no sourcing since it went directly to title.
Posted on 10/10/23 at 12:24 pm to Aubie Spr96
its a gift for purchasing a home its not taxed by the IRS. Your kids lender will send you a gift letter to sign and fill out. DO NOT GIVE THEM MONEY TO PUT IN THEIR ACCOUNT. before closing you will need to give them a cashiers check for the amount made out to the title company. FYI i have been a mortgage lender for 17yrs.
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