Hello, I’m looking to buy a house for the first time and a family member is looking to gift me some money to help with the purchase. What is the maximum amount of money I can be gifted from them without either of us being taxed?
TIA
For 2024, the lifetime gift and estate tax exemption is $12.92 million per individual. Any gifts over the annual exclusion of $17,000 must be reported on IRS Form 709. These gifts count against your lifetime exemption but are not taxed until the exemption is exceeded.
There’s a common misunderstanding about gift taxes. Your family member can gift you up to $12.92 million over their lifetime without incurring taxes. Each year, they can also gift $17,000 per person without even needing to report it to the IRS. It’s very unlikely you’ll encounter tax issues with your home purchase gift.
This might not be the best forum for a precise answer. Consider consulting a tax professional. Lenders don’t report gift money for transactions to the IRS, so your family member should be fine to gift you the funds without any issues.
@Parker
Best answer here
You won’t face taxes unless the total lifetime gifts exceed about $10 million. It’s a high threshold that most people never reach.
The lifetime limit for gift tax is over $10 million, and you only need to file a form with the IRS if you exceed the annual exempt amount of $17,000. No taxes are involved unless these limits are surpassed.
Remember, while taxes aren’t likely a concern for the amount you’re discussing, some lenders require a gift letter to confirm the money is a gift and not a loan. This is to ensure compliance with their lending policies.
You should definitely consult a CPA, but for most situations, gift amounts like $500k won’t incur any taxes. I’m currently working on a purchase where the parents are gifting $250k, and they’ve confirmed there won’t be any tax implications.
Each individual can gift $18,000 annually without needing to report it. For a couple, this means they could gift $36,000 in total to you and your partner, if applicable, without any need for reporting.
@Adi
You’re mistaken about the figures. The annual exclusion amount is $17,000 per person. It’s important to get these details right, especially in professional advice settings.
Linden said:
@Adi
You’re mistaken about the figures. The annual exclusion amount is $17,000 per person. It’s important to get these details right, especially in professional advice settings.
Apologies for the confusion—I mixed up the numbers. You’re right about the $17,000 exclusion per person. Thanks for the correction.
@Adi
It’s important to stay informed, especially with financial matters. Always good to double-check before giving advice.