Taxes for gifting $125K in lump sum to a sibling

[kritter-k]

I am selling a house that my late husband and I own in a community property state. Because of the 100% step-up in cost basis for the house due to my husband’s death plus the cost of improvements we made to the house, I won’t owe any capital gains taxes. I’d like to give my brother $125K of the proceeds as a gift all at once. Can I do that without either of us owing any taxes, or do I need to give him a maximum of $19K per year? I have never gifted anyone else anything. Also, will I need to file any IRS forms for the gift with my 2025 federal return?

[Vanessa A · Accepted solution]

Your brother would not owe taxes on the gift.  Gift tax is paid by the gift giver, not the receiver. If you give your brother $125k, you will not likely owe taxes on it, however, you would have to fill out form 709.  

Although you still do have to report the gift on form 709, there is a lifetime gift tax exclusion of $13.99 million for 2025. This means the amount above $19,000 will use up some of the $13.99 million.  So if you have never given a large gift before, then you would not need to pay taxes on the gift of $125k.  

[rjs]

You do not report the gift on your income tax return. As Vanessa A said, you will have to file a gift tax return, Form 709. That is a separate return that has to be filed separately. You do not file it with your income tax return. You cannot file Form 709 with TurboTax.