[tntsE90]

My parents are giving me a money for a down payment on a home, "6 figures". However, before I go house shopping with them. What are the taxes I should expect the IRS to come after me for if my parents give me this money for the down payment of the home.

[Blake]

not an accountant, but familiar with "gifts" like this. they can only give you $12k/yr as a gift tax free, otherwise it's considered income to you and you will be taxed accordingly.

must be nice to receive a "6 figure" gift.

[MontegoGoGoGo]

Yes, he's right. I have experience with "gifts" too, lol.

[firstkill]

no way around this, except for your parents to put their name on the house.
Either way, their name does not need to be on the loan.


fk

[scollins]

Originally Posted by Blake

not an accountant, but familiar with "gifts" like this. they can only give you $12k/yr as a gift tax free, otherwise it's considered income to you and you will be taxed accordingly.

must be nice to receive a "6 figure" gift.

Actually, the gift tax is generally paid by the donor, not the recipient. At least in terms of reporting to the IRS.

IRS FAQ on Gift Taxes

[stimpy]

Hey, If anyone wants to give me a 'six figure' gift that I can put towards my house, I'll gladly pay the taxes on it.

O Noez!
________
BMW M Coupe

[lauer87]

If your parents have enough money to give you a "6 figure" down payment on a house, I'm sure they have an accountant that is more than capable of providing this information.

[Hawkeye]

I'd have trouble getting a 2 figure gift out of my parents... and my townhome only cost 100K new, haha!

[jun]

yes there is a 12k (i believe 13k in '10) gift tax exclusion per parent (they can give you up to 26k tax free. although, it is quite possible that they will not have to pay any gift tax on the money they give you. i don't work in tax, but i do recall there is a unified gift tax and estate credit. i think it is ~345k that can be given over a lifetime, tax free.

[dawheat]

13K per year per person - so 26K tax free if your father and mother use tha maximum.

There is also a 1 mill per lifetime exemption for each of your parents - applies to any gift over 13K per person per year in aggregate. So you can cut into this exemption by filing the appropriate IRS form as they will keep track of the total gifts your parents give over their lifetime outside of the 13K per person per year.

So at their passing, if their estate has significant value, instead of a large part of it being tax free b/c of the 1 mill per person lifetime exemption, you and your siblings may see a large part of it taxed b/c this exemption was already used up.

So for most people they never hit this gift tax limit. For those who will, you should have an expert tax resource.

[MontegoGoGoGo]

They can buy the house for you in cash, and then you can refinance the house, less the amount of the gift.

They may have to call it a no interest loan that is to be paid off when the house is sold.

Will involve their lawyer doing a lot of paperwork.

[samwoo2go]

you can also structure the gift in different "packages". you parents will each gift you the max 13K limit, making it 26K total. then gift the rest to other people you guys TRUST. like relatives, siblings, really trustworthy friends etc in 13K blocks, they will then in turn gift you back the 13K. No 2 people is directly getting a 13K+ gift and because there is no actual paper work and need to report anything on tax return, it doesn't really add significant trouble for anyone making it easy to do, the money just have to "flash" thru the banks.
I am not sure about the legality of this process, so do it on your own risk. I am not responsible for any breach of tax laws.

[f=ma]

Originally Posted by samwoo2go

you can also structure the gift in different "packages". you parents will each gift you the max 13K limit, making it 26K total. then gift the rest to other people you guys TRUST. like relatives, siblings, really trustworthy friends etc in 13K blocks, they will then in turn gift you back the 13K. No 2 people is directly getting a 13K+ gift and because there is no actual paper work and need to report anything on tax return, it doesn't really add significant trouble for anyone making it easy to do, the money just have to "flash" thru the banks.
I am not sure about the legality of this process, so do it on your own risk. I am not responsible for any breach of tax laws.

wouldnt do that if i were you.

[scollins]

Originally Posted by f=ma

wouldnt do that if i were you.

Yeah, sounds like the IRS would have a solid case for "tax evasion". Heck, it would probably also get you conspiracy charges......

[MJC///M3]

Originally Posted by samwoo2go

you can also structure the gift in different "packages". you parents will each gift you the max 13K limit, making it 26K total. then gift the rest to other people you guys TRUST. like relatives, siblings, really trustworthy friends etc in 13K blocks, they will then in turn gift you back the 13K. No 2 people is directly getting a 13K+ gift and because there is no actual paper work and need to report anything on tax return, it doesn't really add significant trouble for anyone making it easy to do, the money just have to "flash" thru the banks.
I am not sure about the legality of this process, so do it on your own risk. I am not responsible for any breach of tax laws.

I would be somewhat skeptical of this.....

[bolinp78]

Originally Posted by MJC///M3

I would be somewhat skeptical of this.....

Considering that it is a form of tax evasion, I would be skeptical as well.

It should probably be removed from the boards but I don't know what the policies are.

And just so it's clear, this would be like taking candy from a baby for the IRS, they would spot it in two seconds.

[MJC///M3]

Originally Posted by bolinp78

Considering that it is a form of tax evasion, I would be skeptical as well.

It should probably be removed from the boards but I don't know what the policies are.

And just so it's clear, this would be like taking candy from a baby for the IRS, they would spot it in two seconds.

+1. Very good point.

An old boss of mine (very successful multi-millionaire) once told me, "here's my real simply philosophy in regards to taxes, JUST PAY THEM!"

[bolinp78]

Originally Posted by MJC///M3

+1. Very good point.

An old boss of mine (very successful multi-millionaire) once told me, "here's my real simply philosophy in regards to taxes, JUST PAY THEM!"

There are legal ways to "get around" taxes similar to the one that was mentioned, but that is definitely not one of the legal ways.

[samwoo2go]

Originally Posted by bolinp78

There are legal ways to "get around" taxes similar to the one that was mentioned, but that is definitely not one of the legal ways.

want to elaborate?