Gift Tax

[scouchy]

What is the name of your state? California.

Last year, a friend gave his son $100,000.00 to be used as a down payment so he could purchase his own residence. Now it appears that a huge sum is due because of the "Gift Tax". Is there any way around the tax consequences. They have both agreed now that the money will be repaid when the residence is sold and my friend will also receive 10% profit after the sale. The intent here was to provide enough money for a child to purchase his own residence. Any thoughts??

 

[Snipes5]

If it was a loan, it should have been drawn up as a loan.

If you give money to a family member and don't property execute it as a loan, it's considered a gift.

Gift tax won't be due, it's just that a gift return will have to be filed, and the "donor" will have used up some of his 1.2 million total allowed tax free estate amount. Tax due on that will still be zero, unless of course said donor has already given away more than 1M.

Snipes