Expert: Dick Dennis - 3/29/2009

Question
I am selling my house to my daughter and son-in-law who already live there with me. I owe 100,000 and the mortgage banker said I could give a gift equity of 35-40,000 as a down payment. this would eliminate the need for pmi. the house tax value is 145,000. Would I have to pay gift tax or any other tax on the gift of equity? Thank you.

Answer
You are allowed to gift $13,000 EACH ($26,000), Frank, in equity at this time. Since that figure is different than what the banker told you, I recommend you talk to a CPA or tax expert to make sure you do this right. As long as you are within that $26,000 you should not have to pay any gift tax. You can continue to gift $13,000 each to your daughter and son-in-law the next year . . . and the next . . . and the next, until any mortage they signed to you is used up. Now do you see why I suggested to talk to a CPA? The CPA will show you the proper way to do this. I wish you well, Frank.

Dick Dennis
dixiedee13@aol.com