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Posted by Bill on May 23, 2007, 4:43 pm
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Lee.tol@gmail.com (Lee=A0Tol) posted:
> My parents want to gift me $300K to help
> purchase a home. What is the best way to do
> this for mutual benefit with minimal tax
> implications?
Each parent can give you $12,000 each year, without any tax
or estate consequences. If the gifts can be structured
carefully over time (using a total of $24,000 annually -- or
$48,000 if you're married -- with $24K each to yourself and
your spouse) ... then the $300,000 gift could be passed
along in approximately 6 to 12 years (depending on marital
status).
Be wary of Congress, however. Tax rules can be modified at
any time, so any plan should be reviewed in the light of
each new year's changes to the tax code.
For a good basic source of Gift Tax Law and the impact on
estates, read Pub 950. Also, if a single year's gift
exceeds the non-reportable limit, then Form 709, US Gift Tax
Return, will have to be filed by your parents.
These pubs and forms are available from the IRS. Visit your
local office, or www.irs.gov -- which also offers extensive
on-line info, or provides for downloadable pubs and forms.
Bill
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Posted by Herb Smith on May 23, 2007, 4:43 pm
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> My parents want to gift me $300K to help purchase a home.
> What is the best way to do this for mutual benefit with
> minimal tax implications?
Gifts to you of any amount will not create any tax (income
or gift tax) liability to you. Each of your parents can gift
you at least $12,000 per year ($24,000 total) gift tax free.
Amounts over that exclusion amount are subject to Gift Tax
reporting, but may not create an immediate tax bill. If they
have, or will have, exceeded their lifetime exclusion
($1,000,000 each) prior to death there will be tax due.
Otherwise, their lifetime estate tax exclusion (currently
$2,000.000 each) will be reduced by the taxable gifts.
You mention "mutual benefit", but it seems all one-sided
from this viewpoint. What do your parent's gain from this
large gift? except to reduce their taxable estate (and
estate taxes) by some degree.
The gift could be structured as part gift and part
(majority) mortgage loan, with the idea that a certain
amount of the loan be forgiven each year.
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Posted by John L on May 23, 2007, 4:43 pm
Please log in for more thread options > My parents want to gift me $300K to help purchase a home.
> What is the best way to do this for mutual benefit with
> minimal tax implications?
One possibility would be for them to buy the house jointly
with you, with you and them as tenants in common, with
percentage ownership based on the amount you each put in.
For example, if the house cost $500K, they'd put in their
$300K in cash and own 60%, you'd put in your $200K
presumably in some combination of cash and a mortgage and
own 40%. You'd make an owners' agreement stating that
you're responsible for mortgage, taxes, maintenance, and
insurance, and you get to live in the house.
Then each year they gift you $24,000 of the house's value,
$12K from each of them, or whatever the gift tax limit is.
This shouldn't require re-registering the deed, a letter
documenting the gift should do. If you sell before they've
given you the whole amount (13 years unless the gift tax
exemption goes up, or unless you get married and they can
give you and your spouse $24K each), they get the ungifted
share back, and I suppose you could do the same thing on the
next house you buy and keep going. If they die before they
give you the whole amount, they can give you the rest of
their share in their wills which should be tax-free since
$300K is well below the exclusion of any likely estate tax.
Alternatively, if it's unlikely that they'll ever do
something like this again, they can just give you $150K each
and file a gift tax return. There shouldn't be any tax due,
but this decreases their ultimate estate tax exemption by
the $150K each. So long as their total joint estate after
giving you the $300K is under $1.7M, there still won't be
any estate or gift tax. If it'll be over $1.7M, I would
encourage you to pay a few bucks to a competent tax lawyer
or CPA rather than depending on free advice from usenet.
Regards,
John Levine, johnl@iecc.com
Primary Perpetrator of "The Internet for Dummies",
Information Superhighwayman wanna-be,
http://www.johnlevine.com, ex-Mayor
"More Wiener schnitzel, please", said Tom, revealingly.
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<< The foregoing was not intended or written to be used, >>
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Posted by Benjamin Yazersky CPA on May 23, 2007, 4:43 pm
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> My parents want to gift me $300K to help purchase a home.
> What is the best way to do this for mutual benefit with
> minimal tax implications?
A loan should work.
Parents loan you the $$$$$$
You sign a note to pay interest, at market rate, at least
annually. Each year parents forgive the gift tax exclusion
amount. (I think its $12,000 for this year per person) With
gift splitting, a married couple can gift twice that amount.
Consult your own CPA & attorney to structure your own deal.
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by Seth on May 25, 2007, 1:41 pm
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>> My parents want to gift me $300K to help purchase a home.
>> What is the best way to do this for mutual benefit with
>> minimal tax implications?
> A loan should work.
That can make it hard or impossible to get a mortgage; banks
want the equity to be cash, not borrowed.
Seth
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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