Gift of money to daughter
If my wife and I give a gift of equity of, let’s say $150,000 to our daughter when selling our house will we pay income tax on $120,000?
Terry Says
No. When you sell your house (assuming you file married/jointly) you can exclude up to $500,000 of capital gains on the sale of your house. If you’re close to that number, gather all the records of improvements you put in over the years. that will raise the cost basis, and lower the gain amount.
Then, you and your husband can each give $15,000 a year to anyone. So the first $30,000 is your annual gift tax exclusion. Beyond that, under current law, you can give up to $11.2 MILLION free of gift tax over your life and through your will. So I’m assuming you are comfortably under that limit! (If not see an estate planning attorney immediately!)
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What you are describing is a gift of MONEY, not equity. And, as a financial advisor, I can’t help but warning you that you may need this money one day — even more than your daughter does now! So carefully consider this size gift. Because the word “gift” means you’ll never get it back!
