3 ms·

What is a “high amount taxable event” in this context?

• sokoloff 4y ago
  Presumably a misunderstanding or misinterpretation of the gift exclusion rules. It’s a common misunderstanding that gifts over the annual exclusion limit ($17K per donor-recipient pair, so a couple could give a person $34K or a couple could give a couple $68K in a year) incur tax. They do, but only after exhausting the lifetime gift exclusion amount (currently a little over $12M per donor). There is also a process for designating that you’re gifting 5 years’ worth of gifts all at once (so 5x the amounts above before even touching the lifetime exclusion amount). It would be exceedingly rare for a $200K gift to actually incur a gift tax payment (though it would require a Form 709 gift tax disclosure filing).
  • dualityoftapirs 4y ago
    My understanding of the comment is the way the parents would get the money is to liquidate something which would incur taxes, which will be a lot in taxes on $200k even with long term capital gains treatment.
    • than3 4y ago
      Yes, this was the general sentiment. There may be loopholes and financial engineering that can be done, but its generally not available to the average joe. I looked into this as a possibility not too long ago, and the professionals we spoke with basically said you'd either need them to take care of the taxes or be co-signer. Co-signer rights effectively negate the point of getting 'your' house, and can lead to a lot of drama.
      • singleshot_ 4y ago
        Best bet is probably to have them own the house and step up in basis when they move on, if you're really worried about taxes.