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What is the gift tax limit/rate?

My daughter is getting married and my wife and I are helping her and her new husband with a downpayment on a condo as a wedding gift. Will she get taxed on this? What are our options in regards to this?

Mar 14, 2012 by Titus from Coeur d'Alene, ID in  |  Flag
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You may give up to the annual exclusion amount ($13,000 in 2012) to any number of people every year, without facing any gift taxes. Recipients never owe income tax on the gifts. So, you could give up to $13,000 to your daughter and $13,000 to your son-in-law in 2012 with no one owing gift tax. Your wife may also give $13,000 each to your daughter and son-in-law, so, you could technically give them up to $52,000 without triggering gift tax. So, the general rule is: $13,000 per year, per spouse, per person!

In addition to the annual gift amount, your can give a total of up to $5 million starting in 2012 in your lifetime before you start owing the gift tax.

Comment   |  Flag   |  Apr 03, 2012 from Austin, TX

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Last week the IRS issued news that the 2012 annual gift exclusion to a non-spouse will remain at 13,000

Comment   |  Flag   |  Mar 14, 2012 from Loveland, OH

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The annual exclusion amount is $13,000 per person. So, in your case, you and your wife may gift up to $13,000 each (total of $26,000) to any person. (It's unlimited to your own spouse.) If you each gift $13,000 to both your daughter and her future husband, that's a total of $52,000 ($13,000 x 2 x 2). This isn't taxable to the recipient or to you. And you don't have to file gift tax returns if your total gifts to these people do not exceed these limits this year. If that's not enough, you may gift more and it still isn't taxable. If you need to gift more than that, make sure you consult your CPA and estate planning attorney about how to do it. Be aware that current gifting and estate tax laws are set to expire on 12/31/2012 unless Congress does something to extend them or amend them before then.

Comment   |  Flag   |  Mar 14, 2012 from San Diego, CA

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What a nice wedding gift. There are several ways to handle this. Edward and Paul both pointed out your options within the annual gift tax exclusion limits.

Another technique if you wish to make a gift greater than $52,000: make a gift of $52,000 in year one, and make a loan of the balance of the amount you wish to provide as a down payment. Then "gift" the principal and interest (up to $52,000 each year) due in the following years until the loan is retired. You will most likely owe tax on the interest amount - check with your tax advisor - but with rates so low the loan could be structured so as to not create a significant additional liability for you, and still be at a market rate. This technique would preserve your lifetime credit.

If estate planning is not a concern --- your estate is less than $5 million ($10 million with your spouse)--- then you might elect to utilize a portion of your lifetime credit, although this would require some additional paper work and record keeping, and could present a problem if the estate tax exclusion limit reverts to a lower limit in the future. Good luck and congratulations to your daughter and to you and your wife!

Comment   |  Flag   |  Mar 14, 2012 from San Francisco, CA

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Titus, The general rule with gifting is $13,000 per year per person. I would recommend discussing this with you accountant but you should be able to gift a total of $52,000 to your daughter and son-in-law. This is because you and your wife can each gift $13,000 to each person, adding up to $52,000. Again, speak with an accountant to be sure there are no other variables that will change this for you.

Comment   |  Flag   |  Mar 22, 2012 from King of Prussia, PA

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