Gift Tax

My girlfriend and I are selling 2 properties and buying one together. Because of some credit issues, I am going to be the only one on the financing, but she will be on the title with me. If she gifts me $40k from the equity of her house sale towards the new house, am I going to be taxed on the gift? Or because she is a partial owner on the property, would there be no tax? We are in Texas.

If she is on the title with you as a co-owner, then the money she puts into the deal is payment for her share of the property, except to the extent that it exceeds the cost of her half of the property. For example, if the total down payment on the property is $60,000, then her half would be $30,000. The Extra $10,000 would be either a gift to you or a loan to you. It would be a loan if you agreed to make $10,000 more of the payments then she would. If it is a gift under $11,000, there is no gift tax and no requirement for a gift tax return. If it is a loan, there is no tax.

However you decide to handle this, put it into a written agreement that both of you sign.

Thanks for the information. Coincidentally that is the amount we are going to be putting down and that seems like a great way to put it together. Thanks again

Glad to help. Good luck in your new life.