Tax-Free Gifting to Family

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) The amount of the gift determines the tax amount.

If the gift is under $13,000, it is non-taxable.  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 ($13,000) per year.  Be sure to check with your tax accountant for any changes or updates to the tax laws.

2) Gift: Income or not?

Not.  The IRS will not recognize the gift as income which is good news for the receiver (donee).

3) 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 statements, etc.).

For more information on real estate gifting or any other real estate information, please contact us at 888-988-6248 or visit us on the web at

About the Author

Brandon Lau grew up in Kailua and currently resides in Honolulu with his wife Andee and children Caylah, Elijah, and David. His eighteen years in real estate led him to become a Partner at ChaneyBrooks Choice Advisors. Over the past 10 years he has developed the team and systems that has created a high level of service and value for his clients.

What differentiates Brandon and his team is his consultative approach to real estate. He advises clients with relevant data and expert insight to help them make the best choices in real estate. Good choices in planning for long term dispositions, negotiating for the best price or knowing when not to pursue an investment are ways his consultative services will give you an advantage in the marketplace. His bottom line is providing service with the utmost integrity and expertise.