Depending on what you mean by a "huge amount of tax" you may not have that problem. And you have options that would avoid paying federal income, gift, and estate taxes altogether. I'll give you a basic explanation of the rules. Even with a basic explanation this is long post.
Gift tax works on annual basis. You start by adding up all the gifts you give to each individual during the year. If the amount given to one individual exceeds the gift tax exclusion amount for that year, the gift amount that exceeds that exclusion is known as taxable gift. A taxable gift first reduces your lifetime unified credit against gift and estate taxes, and once that credit is used up all future taxable gifts will result in having to pay gift tax. Whatever is left of the unified credit when you die is available to your estate to apply against the federal estate tax.
The unified credit right now covers taxable gifts/estates of up to $13.610 million. The gift tax exclusion for 2024 is $18,000. If you are married you can double that amount by either having your spouse also make a gift to your mother or by filing a gift tax return and electing to split the gift between you. For now I won't get into the election to split the gift, I just want at this point to alert you to some rules that can help you.
I'll give a simple example to illustrate how these rules work. Suppose Alan gives total gifts this year as follows: Becky receives $16,000, Carol receives $75,000, and David receives $125,000. He's made no taxable gifts to Becky because her total gifts were under the $18,000 annual gift tax exclusion. He's made a taxable gift to Carol of $57,000 ($75,000-$18,000) and to David of $107,000 ($70,000 - $18,000) for a total of taxable gifts of $164,000 ($57,000 + $107,000). Alan has never used any of his unified before. Thus Alan files a gift tax return (Form 709) but he owes no gift tax this year. Instead his unified credit is reduced by $164,000 leaving him a unified credit that he can use next year of $13.446 million.
Your chief concern seems to be covering your mother's mortgage payments just until she sells the home. One way you can do that and keep things real simple is give $18,000 this year and then $18,000 early next year to cover the payments (the gift tax exclusion is likely to go up a bit next year due to inflation). If those were the only gifts you gave in 2024 and 2025 you'd not have any gift tax issues because in each year you've not exceeded the gift tax exclusion. You wouldn't need to file a gift tax return at all and none of your unified credit is used up. If she needed more than $36,000 you could give her whatever extra she needs next year and deal with the gift tax return then. You'd also avoid the more complex rules for gift loans, which I'll explain next.
If you do make a loan to her with no interest charged it gets a bit more complicated. I won't walk through the numbers for this because the exact results will vary depending on the month the loan is made because of changing interest rates.. The main thing to know about gift loans is that the issue the tax law focuses on is income tax. Congress did not want to have taxpayers avoiding interest income by making below market loans.
For a little more explanation, when the loan interest rate is below the market rate you are considered to have made a gift to her of the foregone interest and then you are deemed to have received that foregone interest back as imputed interest income for income tax purposes. If the gift of the foregone interest plus all other gifts you make to your mother this year exceeds the gift exclusion amount of $18,000, you'd also have made a taxable gift of the amount over $18,000 and reduce your unified credit. This obviously is not ideal for what you want to do. Small below market loans are not subject to these rules. If the total of all your gift loans outstanding is no more $100,000 then the interest income will capped by your net investment income for the year. In short, by making the gift loan you could end up increasing your taxable income, thus raising the amount of income tax you pay.
You also have the option of just making a flat out gift to her of $125,000, and file a gift tax return for the $107,000 taxable gift and reduce your unified credit by $107,000. You'd pay no gift or income tax on that and if you expect you'll never exceed the unified credit amount it would never result in gift or estate tax for you to pay.
Note that in 2026 the tax law adoped in 2017 sunsets and unless Congress acts next year to address the sunset the unified credit will drop to something over $5 million. Most people will not have to worry about gift and estate tax issues even at that reduced credit amount.
You might want to see a tax lawyer or other tax professional familiar with income, gift, and estate taxes, explain your situation and get specific advice on what will achieve your goal of helping your mother at the least tax cost.
