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No. Just talk to your mortgage broker about having them fill out the federal gift letter. They can give you a one-time gift for a down payment that you don't need to claim, and they don't eitherMy parents might be helping me with the downpayment on a house in the form of cash/check to me. Do taxes need to be paid on that money? How do rich families do it?
Close but no cigar.You only have to actually pay additional money towards taxes, due to a gift, if over a life time you gift over something like $5 million. The idea here is to try to catch people avoiding having their estate eaten up by death taxes, by giving all their money away before they die to prevent its taxation. Less than that, and it is just a tax form you have to file for gifts over the annual limit to another person. It was $14,000 per person last time I checked, so if you're married and have 2 parents, that's $14,000 * 4 = $56,000 per year before needing to fill out the form.
And, the gift giver fills out the form, not you.
Once the limit exceeded $1 million, I was like "well, I guess I don't have to worry about what this limit is any more." It's a nice problem to have.Close but no cigar.
It's $15,000 per year and $11.2 million lifetime now. I didn't know the lifetime limit was so high.
So the OP's parents can give him just about any amount tax free as long as he includes IRS Form 709 with his tax return.
/END THREADNo. Just talk to your mortgage broker about having them fill out the federal gift letter. They can give you a one-time gift for a down payment that you don't need to claim, and they don't either
If you give over $15k to a person in one year (each parent gets the $15k limit even if filing jointly) no problem. Above that you need to file a form (I think it IRS form 709) that deducts the amount of the gift from your estate tax exemption when you pass.Talk to an accountant, there is some kind of maximum “gift” a parent can give over a lifetime. Years ago we were fortunate enough to buy and gift my daughter a property, there is some kind of tax form that she had to file and I believe just resubmit annually. No tax paid on the amount.
They'll also have to source the money, show the bank where it came from. Most likely provide their last 2 bank statements or wherever they hold the money.My parents might be helping me with the downpayment on a house in the form of cash/check to me. Do taxes need to be paid on that money? How do rich families do it?
A problem is banks often look a couple of statements back when granting a mortgage and requires that any "new money" is not a loan and thus a liability on the borrower's balance sheet.This is all crap. The money in a bank account is yours to do with what you want. Make a cash withdrawal in $100 bills and hand it to them. Jack.
This is not complicated.First, congratulations.
Second, you should consider consulting a tax accountant and real estate attorney and not rely on a web forum for accurate info. You`ll get opinions here for sure but not not sound legal advice.
Anyway, enjoy your new home!