Required to File Gift Tax Form when Purchasing a Home with our Child?

[txgirl147]

Are you saying it's a completed gift right now or it would be a completed gift if we were to take our names off the deed and transfer our 2/3 of the property to my daughter?  And if it is not considered a completed gift right now, do we still have to file the 709 and claim that the down payment and mortgage payments we made towards the purchase of the property are a gift?

Also she did sign the mortgage note (I noticed down below that you said she did not)...all 3 of us are on the deed and on the mortgage if that makes any difference in terms of this being a gift.

Sorry for all the questions...we are confused and trying to learn as much as we can!

[txgirl147]

Correct...we did not give any money directly to our daughter when we purchased the home.  The down payment was given to the title company (or whoever did the closing) and all mortgage payments have been paid directly to the lender by us.

[M-MTax]

Your daughter got an undivided 1/3 interest in the property and she paid nothing. If she's personally obligated on the mortgage and you're paying it then that's part of the gift as well. So, the gift would be 1/3 of the $200k down payment plus her share of the mortgage that you are paying.

Another person in this thread is confused.....this is not the same as, say, a joint bank account where one person deposits all of the funds and there is no gift until the other joint owner withdraws some or all of the funds in the account. Your daughter has 1/3 ownership which is irrevocable since she's on title and that has value immediately.

[DaveCFP]

Good morning - this is an interesting thread.  In part because it has two phases, a mortgage down-payment that has been made and an ongoing monthly payment.  It sounds as though everything has been done with/thru the mortgage company and sellers...no money changed hands directly from parents to children.  (not a gift)  Your child is living in a house she doesn't pay for (a gift).  But if something happened to you & your hubby, she would bear the full financial obligation of the mortgage (not a gift).  She is on the loan (not a gift)  She didn't contribute to the down payment (a gift) but she also didn't receive the down-payment, it went straight to a third party (not a gift.)  You and your husband participate in owning the home (not a gift, it is mostly your property).  She has a share of ownership (a gift) but the value of that ownership is questionable (suppose she sued for severance and tried to sell 30% of a primary residence...any interest buyers?...nope...not a gift as it doesn't have marketable value - the house isn't owned in an LLC or S-Corp with marketable fractional ownership.)  She doesn't participate in the mortgage payments (a gift) but the Annual gifting limit of 2 living parents to a child is $17,000 in 2023 and $18k in 2024 Per Giver...so mom and dad can give a total of $36,000 to daughter this year...if mortgage plus HOA is less than $34k in 2023 then no gift tax reportable.  Based on the numbers in the thread...$200k down and $1400 per month I'm guessing the house is in the $400k-$500k ballpark?  So, what is a completed gift?  It is when the recipient has full-control of the asset.  Technically, she doesn't.  When the asset has no liens for which she is personally responsible.  She does have debts and liens, she is on the mortgage.  My very first impulse put me on team "Gift" but then I thought it through in detail and switched to "Team No Gift" for the following reasons: daughter doesn't have anything of value she can sell free & clear, daughter didn't receive funds for down-payment, monthly payments are less than reportable gift tax.  Additionally, daughter does have liability for a debt should Parents be unable to make payments.  It ultimately comes down to how aggressive/conservative you want to be...is your net-worth over the existing estate tax exemption of $13.6 MM?  If so, perhaps you want to be more conservative and file a Gift Tax Return "just because."  But I think a gift tax return would be more paperwork than actual progress in this instance.

[M-MTax]

no money changed hands directly from parents to children.  (not a gift) 

Yeah, but that is NOT the test as to whether a gift was made or not. In this case a gift was made. 

So, what is a completed gift?  It is when the recipient has full-control of the asset. 

Correct and the daughter has full control of her 1/3 interest in the property. 

No offense but you're really lost here and need to stop posting information that is a product of your misunderstanding and misapprehension of the law relating to taxes and gifts.

[janaka1943]

Currently form 709 is not in Turbotax 2023. Where do I see a 709 sample form filled for giving $270000 to my adult son in 2023.

Gspear

[xmasbaby0]

@janaka1943

TurboTax does not include Form 709 because that form is not ever part of an income tax return.  It is a separate tax form that must be filed all on its own.

Gifts given to family members, friends or other individuals are not deductible.   Gifts received are not taxable to the person who received the gift, and are not entered on a tax return.

If your gift exceeds the yearly limit ($17,000 per individual)  imposed by the gift tax rules, then you will need to complete a Form 709 gift tax form and send it to the IRS, although it is very unlikely that you will owe any tax.    In 2024 that yearly limit will increase to $18,000.

TurboTax does not support Form 709.  It is not an income tax form and would not be included as part of an income tax return.

Here is a link to the form:

https://www.irs.gov/pub/irs-pdf/f709.pdf

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

[janaka1943]

Thank you very much.

Gspear