Gift of Equity tax question

[shinaad]

Hello,
I am purchasing the house I live in from my mother.  SHe will be giving me a gift of equity of $80,000 to use as a down payment.  I know the limit per year is $14,000 and more than that she must file a gift of equity tax form (702 maybe?)  So the additional $56,000 will be counted against the lifetime amount of 5.45 mil.  However, are the any additional taxes she will have to pay on that $56k this year?

[TaxGuyBill · Accepted solution]

No, there will not be any taxes directly owed because of the Gift, but she still needs to file a Gift Tax Return (Form 709) to report the Gift.  TurboTax does not prepare Gift Tax returns.

Because you are receiving the home at a lower price, whenever you eventually sell, it is possible you will owe taxes because of the 'gain' (profit), but if it is your Principal Residence, in many cases there will not be any taxes due when it is sold.