Originally Posted by thmpr52
So my wife and I are purchasing a home. Each of our parents have provided an amount over 13,000 to help us with out down payment. We have provided a gift letter to the bank that is required when receiving money from family. The loan officer, financial advisor, nor attorney never mentioned anything regarding tax penalties that may incur to either our parents or us.
Should we be worried about this? What is the rule regarding monetary gifts for this purpose?
Thank you in advance for your help!
As long as it is purely a gift for you ands your spouse, you , as donees, do not need to pay tax on the gift of $13K and your parents do not need to file form 709 since $13K doesn’t exceed the annual gift tax exclusion of $13K for 2012 and $14K for 2014(UNLESS they elect gift splitting as they live in a non-community pty state and in this particular situation, they do not need to elect gift splitting).Even if it is a gift loan and even if no any interest is imputed on the gift loan of$13K( OR $100K or less) if your, as borrowers, net investment income(i..e, interest, dividend or capital gain or etc) for the year doesn’t exceed $1K.