@santhanr01
Your original question said that you would pay off the mortgage for your "brother/sister." Now you are talking about your brother's wife. Who is actually on the mortgage? When you said sister did you mean sister-in-law (your brother's wife)?
To avoid having to file a Form 709 gift tax return by doing what pk is suggesting, you would have to make 4 separate gifts:
- from you to your brother
- from you to your brother's wife
- from your wife to your brother
- from your wife to your brother's wife
Each of the individual gifts would have to be $18,000 or less.
If you and your wife jointly make a gift of more than $18,000, you would still have to file a Form 709 in order to "split" the gift. The end result is the same as if you made two separate gifts, but you have to file the form.
You also said that you would make a single payment of $50,000 directly to the mortgage lender. That would make it difficult to prove to the IRS that there were 4 separate gifts, if you were audited.
Even if you have to file a Form 709 gift tax return, you will not have to pay any gift tax unless the total amount of all gifts you have made in your lifetime is more than $13.6 million (for 2024). But you still have to file the form if you make gifts totaling more than $18,000 to any one person in 2024.
A gift tax return, Form 709, is not part of your income tax return. It has to be filed separately. You cannot file a gift tax return with TurboTax.
