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Originally Posted by zenm0nkey A friend recently told me that he paid off his daughter's mortgage for her in 2014. The amount he paid was upwards of $174,000 which he had wired directly from his bank to Wells-Fargo on his daughter's behalf. He asked me what the tax ramifications of this are and after doing a little digging online I told him it appears that neither he nor his child will have to pay taxes on this money so long as they characterize it as a gift and both he and his daughter file an IRS Form 709 so that the IRS can deduct the $174,000 from his lifetime gift allowance. Is my understanding of the situation correct and is there any other advice I should give this guy (other than doing this type of research BEFORE writing such a large check in the future!). |
Partially, his daughter DOES NOT need to file form 709 but only father needs to file f709 as a donor; The annual exclusion for gifts is $14K for 2013-2015; as $174k exceeded $14K.Also as the gift money id after tax dollar, it is not deductible on income tax return.