Gift Tax Myths

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From my personal experience as a Certified Mortgage Planner www.cmpsinstitute.org/ I would say that the Gift Tax is the most missunderstood part of the whole I.R.S. rule book.

Most people think that a gift of up to $12,000/year to a family member is free of tax to both giver and receiver. TRUE.

But there is so much more that is also TRUE.

1. In any one year both you and your spouse can make gifts of $12,000 to as many people as you wish, family or not. This can be repeated every year. NO TAX.

2. At any time each of you can make gifts of $1,000,000 to any one person or combination of people. This is a lifetime total. NO TAX.

SUMMARY:

$12,000 per person tax free in any one year.

e.g. Mother and Father each gift $12,000 to both Son and Daughter-in-Law (total $48,000) toward a down payment on their 1st house. By making one gift in December and one in January this could be $96,000.

$1,000,000 tax free, either all at once, or over a lifetime.

e.g. Mother gifts Daughter $500,000 to buy 1st house outright.

A definitive description of the Gift Tax can be found at www.irs.gov. Search for “publication 950″. I am not formally qualified as a tax advisor or accountant. Anyone wishing to utilyze these or similar strategies should consult a Licenced professional.

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