6

I recently married and am planning to buy a house, my parents would like to assist us by giving a gift to put into the house. The limit for this year is 13000, now my question is, is this limit per person or per couple? I.e. is this scenario allowed:

My father and mother gift me 26000, and then gift my wife 26000 for a total of 52000.

We file our taxes jointly.

  • If you are planning to have a mortgage for part of the cost of the house, be advised that mortgage companies frown on this practice unless the giver(s) is also listed on the mortgage. I understand this is less of a problem if there is a longish period of time between the gift and the mortgage application (a year or more), unless there is just no way you could have saved that amount of money on your income. – kajaco Oct 7 '10 at 16:06
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The scenario you describe is perfectly legal. A couple can do what the IRS calls "Gift Splitting" and give $26,000 to an individual. You could do this twice and one couple can give another couple $52,000 in a calendar year.

IRS Pub 950 (pdf):

Gift Splitting

If you or your spouse makes a gift to a third party, the gift can be considered as made one-half by you and one-half by your spouse. This is known as gift splitting. Both of you must consent (agree) to split the gift. If you do, you each can take the annual exclusion for your part of the gift.

In 2009, gift splitting allows married couples to give up to $26,000 to a person without making a taxable gift.

If you split a gift you made, you must file a gift tax return to show that you and your spouse agree to use gift splitting. You must file a Form 709 even if half of the split gift is less than the annual exclusion.

Example. Harold and his wife, Helen, agree to split the gifts that they made during 2009. Harold gives his nephew, George, $21,000, and Helen gives her niece, Gina, $18,000. Although each gift is more than the annual exclusion ($13,000), by gift splitting they can make these gifts without making a taxable gift.
Harold's gift to George is treated as one-half ($10,500) from Harold and one-half ($10,500) from Helen. Helen's gift to Gina is also treated as one-half ($9,000) from Helen and one-half ($9,000) from Harold. In each case, because one-half of the split gift is not more than the annual exclusion, it is not a taxable gift. However, each of them must file a gift tax return.

  • How does the "lifetime exemption" gift tax factor in to this question? If I give someone $10k USD, is $10k USD subtracted from my lifetime exemption? – Pacerier May 14 '13 at 14:23
  • @Pacerier The lifetime exemption only applies for amounts above the annual exemption. – Alex B May 20 '13 at 22:06
  • @Pacerier To add to Alex B's comment, the lifetime exemption is reduced only if the donor chooses to do so by filing Form 709 and requesting this reduction. The alternative is to file Form 709 and pay the gift tax due (generally not advisable for most people since the lifetime exemption is more than $5 million and most people do not need to worry about reducing their lifetime (combined gift and estate tax) exemption). If the donor does not file Form 709 at all, the IRS can go after the recipient to collect the gift tax due, or perhaps deem it income to the recipient and want income tax. – Dilip Sarwate Dec 16 '14 at 19:59

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