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Gift Taxes on Downpayments

Happy Friday!

With rising property values, more and more homebuyers are getting gifts from their parents for the downpayment. The topic of gift taxes usually ensues because parents think if they gift over a certain amount ($17K for 2023) then they'll have to pay taxes on the gift.

But here's what most people don't know… no one has to pay tax on a gift until the lifetime gift amount reaches $12.92 Million!

So what's the $17K number about?

If someone gifts more than $17K in a given year, the giftor simply needs to file 1 extra page with their taxes stating how much the gift amount was. This essentially gets the gift on the IRS's radar so they can start tallying the lifetime amount.

Once someone gets to the point of gifting more than the lifetime exclusion amount of $12.92 Million, THEN the IRS would add up all those forms over the years and calculate/assess a gift tax.

The obvious point here is that most people are never going to even get close to having to pay gift taxes.

So next time your client brings up a gift for their downpayment, let them know the person gifting it to them probably doesn't need to worry about gift taxes. This can save the whole family a lot of stress.

Given that I am a Mortgage Loan Officer not a tax advisor, the disclaimer is to check with one. But here is an article that lays this out well enough to send to your clients if/when this comes up.

Call me anytime to discuss this topic further, or if you simply have a mortgage question.

I will be available this weekend if you have a client who would like to get prequalified before Monday!

Have a great weekend!

All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. CrossCountry Mortgage, LLC (“CrossCountry”) does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by CrossCountry.