Planning to gift money to a family member for a real estate purchase and want to know the tax
implications it may have? Keep reading to get the facts:
1)What is a gift?
According to the IRS website (see https://www.irs.gov/businesses/small-businesses- self-
employed/frequently-asked- questions-on- gift-taxes#2), a gift is “any transfer to an individual,
either directly or indirectly, where full consideration (measured in money or money’s worth) is
not received in return.”
2) The amount of the gift determines the tax amount.
As of 2018, If the gift is under $15,000, it is non-taxable i.e., the annual exclusion for gifting is
$15,000. If you want to gift more than that but still want to try and avoid taxation, here is a
suggestion: You can gift your amount in the form of a loan. The loan should have all the normal
components, such as interest and repayment terms. Then, at your discretion, you can forgive
repayment one year at a time, forgiving only the maximum amount allowed ($15,000) per year.
Be sure to check with your tax accountant for any changes or updates to the tax laws.
3) Gift: Income or not?
Not. The IRS will not recognize the gift as income which is good news for the receiver.
On a separate note, the IRS website also notes that gifts to approved charities can be
deductible on your itemized tax return.
4) If I try to refinance later down the road, will I need another gift letter?
If the money has been in your account for at least two months, you will not need another gift
letter from the donor. If it has been in your bank account for less than two months, the lender
will require a gift letter and possibly a verification of the donor’s funds (pay stubs, bank
5) Gifting Property
If you and/or your spouse decide to gift away property that you own together, each of you are
entitled to an annual exclusion of $30,000 (for 2018).
(See: https://www.irs.gov/businesses/small-businesses- self-employed/frequently- asked-
6) What about the estate tax?
According to the IRS website “The Estate Tax is a tax on your right to transfer property at your death. It
consists of an accounting of everything you own or have certain interests in at the date of death (Refer to
Form 706 (PDF))”. These assets can include everything from cash and securities to real estate
and other assets. The filing of an estate tax return is required for assets exceeding $5,490,000
as of 2017 and $11,200,000 in 2018. (Please see IRS website for more information on estate
taxes: https://www.irs.gov/businesses/small-businesses- self-employed/estate- tax).
The foregoing information is not intended to serve as advice on taxes. For more information on
gifting, please refer to the IRS website: at: https://www.irs.gov/businesses/small-businesses-
self-employed/frequently- asked-questions- on-gift- taxes#2 . Before deciding whether or not to
make a gift, always be sure to consult with your tax professional. For more information on real
estate gifting or any other real estate information, please contact us at 808-753-9033 or visit us
on the web at www.hiluxurycondos.com.
The foregoing information may change as a result of the passage of the Tax Cuts and Jobs Act.