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Gifting Down Payment Funds Without Paying Gift Tax
Posted 11:48 a.m., April 21, 2008
Gifting Down Payment Funds Without Paying Gift Tax
I’ve noticed many people believe they can only give $12,000 per year per person without paying gift tax. This misconception frustrates many parents who want to give a down payment on a home to their children.
According to Camarillo CPA Michael Drews, you can give up to $2 Million tax free in 2008 and 3.5 Million in 2009. The amount over $12,000 to any one person is subtracted from the amount of your estate that passes to your heirs tax free. There are forms that must be filed with your tax return so the government is notified that you’ve used part of your tax exemption on the money that passes to your heirs, but no tax is due.
Please pass this information along to anyone buying a home or anyone who has children buying a home. In my experience, I’ve found attorneys, college professors, in fact most people, are not aware of this option.
Scott Friedman
Mortgage Broker
(Including Reverse Mortgages)
900 Avenida Acaso #G
Camarillo CA 93012
805 383 2545
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Posted by clarence (Clarence Chan) on June 3, 2008 at 9:29 a.m.
Thanks for writing about this important but sometimes hazy topic. But I think the statement by the CPA re: the exclusion amount is wrong: for estates, it's $2M. But for gifts, it's only $1M. (http://www.irs.gov/publications/p950/...)