Today I thought that I would revisit one of my favorite posts from the past. This information is still valuable today. Enjoy!
And remember, everyone should have real estate license. After two years, you should have your brokers license. We can provide the courses to help you get there. While you’re at it, you might as well become a Mortgage Loan Originator too. As the Boy Scouts say, “Be prepared.”
Do you understand these statements and why? If not, keep reading—three quick articles follow that will clear things up.
- “If I gift my son more than $17,000 this year, I will owe taxes.” Wrong
- “It is good tax planning in most cases for a Senior Citizen to gift a long-owned home to avoid probate.” WRONG
- “A lender can get a judgement against a borrower on a nonrecourse home loan by doing a Judicial Foreclosure.” WRONG
Still confused? Don’t worry. Read the three short posts following one another for clarification.
GIFT TAX: WHAT YOU NEED TO KNOW
- There is understandable confusion about IRS Regulations, especially regarding gift and death taxes. I would like to quote a phrase from the Internal Revenue Service Publication 559. “Most gifts aren’t subject to the gift tax and most estates are not subject to the estate tax.”
- The statement above is from the highest tax authority in the land. Read it again.
- For 2023 an individual has an annual exclusion of $17,000 or $34,000 for a couple. Each individual has a 2023 Lifetime Gift Tax Exemption of $12,092,000 and the couple’s Lifetime Exemption is $24,184,000.
- Let’s assume that a couple gave a person $100,000. That is $66,000 over their exclusion. According to the IRS the couple owes no tax in 2023.
- The couple must file a Form 709 and tell the IRS what they have done.
- On Form 709 the $66,000 must be subtracted from their total exemption. This leaves the couple with only $24,118,000 exemption for their Lifetime. No tax is due until they give away that amount.
- Some gifts are not subject to the tax. This list includes school tuition, charitable donations, medical expenses, political contributions and gifts to spouses and dependents.
- BTW, if there ever is a tax to pay, the donor pays the tax. So if Grandma gives you a nice check, it is tax free.
- I would like to stress that I am not giving legal advice. I am simply telling you to read IRS Publication 559 and IRS Code Section 102 and talk to your tax people.
- Then, pass this information on to your clients, friends, associates, neighbors and others. They will be glad you did.
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