I'm recv'ng a gift of funds from my mom to put as a downpayment on a house, do I have to pay tax on the funds?

Question

I live in California. My girlfriend & I have saved enough to put down 10%, my mom is willing to match our funds. She's really concerned that I will be taxed on this Gift of Funds (which bums her out b/c she states she's already been taxed on said funds)... I read somewhere, from a webpage dated from sometime back in 1999, that the "current" tax laws state that I won't be taxed on those funds if indeed it is a purchase of a primary residence (not an investment property)

Answer 1

Talisman has confused the impact of the Unified Lifetime Credit on Gifts and Estates.  The Gift limitation is $1,000,000.  The Estate Tax Exclusion is currently $2,000,000.

Judy & Steve are correct.  Talisman isn't.

Answer 2

Sigh.. here's a link directly to the IRS website on gift taxes below:

The previous responders came close.  Any gift under $12,000 (twice that from a married couple) does not need to be reported.  Gifts over $12,000 per individual gift-giver need to be reported to the IRS on a gift tax return but trigger no immediate tax.

Once a gift-giver's gift totals reach $2 million - then the tax kicks in.  This often happens after death, thus the nickname "the death tax" or the "inheritance tax".  The tax trigger amount has been $2 million since year 2006.  In previous years, it was smaller.

Some have theorized that the government should eliminate this tax completely, but as it is seen as a "tax on the rich", it is unlikely to be elimnated in the near future.

Answer 3

ask the state of California about the funds from your mom, and to see if they have updated the tax laws from 1999.

Answer 4

No, you won't pay tax on it.  If the amount is over $12,000, she'll have to file a gift tax return, although she very probably won't have to pay a gift tax on it.

Answer 5

There is no tax on the gift.  Your mother can give up to $12,000 each year to any number of people (you and your wife would be 2, so she can give $24,000 total to you).  She then has a $1,000,000 (1 million) lifetime exemption for gifts over the annual $12,000.  So unless you are buying a real big house, you should be okay.  Check the link below for more info.

Answer 6

About gits and gift taxes, read

http://taxipay.blogspot.com/2008/03/us-g...