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extorris
New Member

Would the transfer of this money be considered a gift from my mother requiring a Gift Tax Return form 709?

I am listed as a joint account holder on a savings account with my elderly mother.  The balance in the account came from the sale of her home approx 1 year ago.  She has told me I can use money from the account towards the downpayment of my first time home purchase.  Can I just transfer that money into my other account or would that be considered a gift that would require a gift note from her for the mortgage lender and require her to file a Gift Tax Return form 709?

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Opus 17
Level 15

Would the transfer of this money be considered a gift from my mother requiring a Gift Tax Return form 709?

I believe it would be a gift at the time when she put the proceeds from the sale of (her) house into (your) joint account.  So if the amount was more than $14,000 per person (spouse involved?) then a gift tax return was due at that time.

Now, the money is yours.  Whether the bank wants a gift letter now or wants to see it in a solely owned account is up to their underwriting department.  Since the usually require documentation of the source of any large movements of money right before buying a house, my guess is you should leave the money in the joint account.  If you move it, the bank might require a gift letter, but that's separate from the IRS.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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2 Replies
Opus 17
Level 15

Would the transfer of this money be considered a gift from my mother requiring a Gift Tax Return form 709?

I believe it would be a gift at the time when she put the proceeds from the sale of (her) house into (your) joint account.  So if the amount was more than $14,000 per person (spouse involved?) then a gift tax return was due at that time.

Now, the money is yours.  Whether the bank wants a gift letter now or wants to see it in a solely owned account is up to their underwriting department.  Since the usually require documentation of the source of any large movements of money right before buying a house, my guess is you should leave the money in the joint account.  If you move it, the bank might require a gift letter, but that's separate from the IRS.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
KristaC
New Member

Would the transfer of this money be considered a gift from my mother requiring a Gift Tax Return form 709?

The IRS Publication on Form 709, under 'Who Must File' states: 

"If you gave gifts to someone in 2016 totalling more than $14,000 (other than to your spouse), you probably must file Form 709. But see Transfers Not Subject to Gift Tax and Gifts to Your Spouse, later, for more information on specific gifts that are not taxable." (https://www.irs.gov/pub/irs-pdf/i709.pdf)

TurboTax has an article with more specifics that may help clear this issue up for her:

https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/...

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