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My parents are buying a condo in a 55+ community in Florida and I'd like to help with the down payment. The community requires 30% down and I'd like to sell stock to help them. From what I know, I can gift the stock to them and since my parents are in a lower tax bracket, they could front the tax bill which would be overall less as opposed to me paying the tax bill.

I asked if I could be on the mortgage since I could just pay directly but this is forbidden since all signers have to be 55+.

I don't ever expect to have the money paid back.

I read about a gift tax but maybe I could pay each of my parents $16,000 to max out the gift tax limit?

https://www.nerdwallet.com/article/taxes/gift-tax-rate

Is there anything else you advise me to do?

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  • How about gift tax consequences?
    – littleadv
    Feb 8, 2022 at 19:16
  • @Aganju No I do not expect the money back. But maybe if I charge as a loan, I can avoid the gift tax?
    – saavysaver69
    Feb 8, 2022 at 20:40
  • @littleadv Yes, gift tax comes into play. I'd like to avoid that as well.
    – saavysaver69
    Feb 8, 2022 at 20:41
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    You can give much more than $32k if you are willing to apply it against your lifetime exclusion (which is currently somewhere around $11M).
    – chepner
    Feb 8, 2022 at 21:18
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    The only "drawback" to applying a larger gift against your lifetime exclusion is that it reduces the amount that will be exempt from estate taxes your heirs will have to pay. But if your estate wouldn't be anywhere close to $11M in the first place, the gift to your parent now won't have any practical effect on your heirs.
    – chepner
    Feb 8, 2022 at 21:24

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I don't ever expect to have the money paid back.

The lender will not be happy with this type of statement.

When the lender sees the large sum of money hit their bank account, they will require that you and your parents sign a form saying it is a gift. That means they never have to pay it back.

Why does the bank care? If your parents have to pay it back, then it is another loan and there is no equity in the property. That either forces the lender into requiring PMI or it fails to meet the lenders requirements and the mortgage will not be approved.

So what to do?

Giving them $32,000 in cash or shares this year is up to you regarding the income taxes. If you are at or under the limit, then the only taxes involved are those triggered by selling the shares.

If $32,000 this year isn't enough; and you can't wait until next January to gift them another $32,000, then you will need to dip into your lifetime maximum. If you don't think you will ever come close to your estate getting to the current limit of over $12 Million, giving some away now should be a big issue.

I asked if I could be on the mortgage since I could just pay directly but this is forbidden since all signers have to be 55+.

This is typical of this type of community. Also the general advice is don't be a co-signer because it ties up your credit.

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