Giving a Gift to Help With Down Payment? Don’t Leave Out Uncle Sam

April 05, 2011

legislation may affect Chocago real estate marketAt children’s birthday parties, it’s common for young guests to receive a party favor. The small trinkets and candy help ease the green-with-envy pang that comes from watching the birthday child open all those presents.

If you’re thinking of giving a gift to a loved one to help them make the down payment on Chicago real estate, you might think of Uncle Sam as one of those dejected party guests. If your gift is big enough, he’ll want his share, too.

According to Eva Rosenberg, tax expert at the

Equifax Personal Finance Blog, the gift tax was instituted to keep people from giving away their assets in order to avoid estate taxes. She reports that 2011 rules allow taxpayers to give away up to $13,000 worth of gifts during the year. That number includes monetary gifts as well presents of the wrapped-with-a-bow variety.

In her article, “

Do I Get a Deduction for My Gifts? Or Do I Get Punished for Being Generous?
Rosenberg mentions some ways an honest taxpayer might be able to give more. If a gift is meant to benefit an entire family — as a down payment on a home would — separate $13,000 gifts might be made to both the husband and the wife who are signing the mortgage. Rosenberg even suggests giving the children in the family gifts, increasing the total in $13,000 increments.

If the family buying the home owes money to medical or educational institutions, a generous taxpayer could pay those bills without having the money count toward the gifts given. Payments would be made directly to the school or hospital, not to the person indirectly receiving the gift. By having those debts paid, the homebuyer would have more money available to make a down payment or a monthly payment.

For more information on gift tax rates and estate taxes, visit the

Equifax Personal Finance Blog.

About The Author

Read All Stories By Carol Morgan

Carol Flammer is a public relations and social media marketing expert, strategist and consultant. With 20 years of experience, Carol has established herself as the “go to” for real estate and construction products public relations and social media. Carol is president of Flammer Relations, Inc., and managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Atlanta and Chicago.

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