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Tax Planning/gift to use as a down payment


I am talking with my aunt and uncle regarding a possible gift to use as a down payment for my move up house.  I am trying to understand the federal gift tax regulations regarding that.  I understand about the $14,000 gift tax free limit per donor.  My question is how should the mechanics work specifically if receiving a gift from both my aunt and uncle separately?  Do I need 2 separate gift letters?  Do the funds needs to come from separate accounts with only the Aunts name and only the Uncle’s name or can they can come the same joint account?  Is it important that they process this as 2 separate transactions of $14k each?

John - You have two issues here, as I understand your question.  One is the issue relative to requirements to obtain a home loan.  The other has to do with documentation to defend yourself in the event the IRS were to question a bank deposit into your account during an examination of your tax return.

Both of your questions overlap somewhat, but let me tackle the first one, the loan issue.  Gift letters are required in most cases in order to obtain a home loan.  They are not required in the case of an IRS examination, but they help.  The lender will likely not care about the amounts that are gifted to you (unless they seem excessive).  The IRS will care about the amount as you know the limitation of $14,000.

In excess of the $14,000, a gift tax return would be filed by the giver.  It may be that there is no tax involved, because the giver can give a lifetime maximum, adjusted for inflation.  This year it is $5.25 million each; next year it will rise to $5.34 million each.

The best thing to do is have your aunt write a check for $14,000 and your uncle to write a check for $14,000.  It can be from the same account, but it is best if each of them sign one of the checks.  If you are married, they can double that amount as well and write one to your spouse as well. (If they are so generously inclined, of course!)

I hope this answers your questions.

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As an Enrolled Agent, I am fully capable of providing tax advice as it relates to personal and business income taxes. Enrolled Agents are the only Federally licensed tax practitioners and are admitted to practice before all administrative functions of the IRS. My specialty is working with small business owners who file Schedule "C" and helping them to structure their business in such a way as to maximize as many tax advantages as possible. I also enjoy working with individuals who have both routine as well as complex tax situations. I prefer to concentrate on individuals and small business tax planning.


I have a 25 year background in financial services including tax, bookkeeping, insurance, real estate and securities. I was previously the Chief Financial Officer of a local and national franchise organization. I am currently semi-retired, but used to own (in partnership with another EA) an individual and small business financial engineering firm where I work with nearly 2,500 individuals and small business owners in nearly every state and almost every continent, assisting them in all aspects of their tax and financial well-being. I have prepared or reviewed more than 8,000 tax returns in my career.

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