QUESTION
Will my elderly mother pay a gift tax if she sells her home and we buy a home together?
Asked on Jul 12th, 2013 on Taxation - Colorado
More details to this question:
My mother is 71 yrs old. The house she lives in is not in good condition. My husband and I want to live with her in a couple of years. If she sells her house and uses the money from the sale as a down payment for a house that she and I purchase together, as well as for some furnishings for herself, such as new mattresses, will she be required to pay a gift tax if the amount of the sale of her home is half or less than half of the cost of a new home and the loan that is taken out to pay for the remaining cost of the new home is paid solely by me (and my husband)?
1 ANSWER
Robert Barnhill III
Until your Mother makes $5,250,000 in taxable gifts during her lifetime, she will not owe any gift taxes. While a gift tax return is due if the gifts for the year exceed $14,000 per donee, until the total taxable gifts since 1932 exceed $5,250,000, no gift taxes will be payable. While your Mother will probably have a taxable gift from the transation described and need to file a gift tax return (Form 709), no tax will be due since I doubt your Mother has made $5,250,000 in taxable gifts.
Answered on Jul 13th, 2013 at 4:24 PM