Money Gifting

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[quote author="Minimorty" date=1250909689][quote author="mprince" date=1250908755]If you look at the link IrvineRealtor posted to the IRS it appears your wouldn't have to pay any taxes on the money gifted to a child. No matter what the amount is.</blockquote>






Even to your child, the lifetime gift tax exemption is "only" $1,000,000 per spouse.</blockquote>
Correct.
 
Ancient Chinese secret in keeping money invisible.











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[quote author="awgee" date=1250935828][quote author="Minimorty" date=1250909689][quote author="mprince" date=1250908755]If you look at the link IrvineRealtor posted to the IRS it appears your wouldn't have to pay any taxes on the money gifted to a child. No matter what the amount is.</blockquote>






Even to your child, the lifetime gift tax exemption is "only" $1,000,000 per spouse.</blockquote>
Correct.</blockquote>


How do they apply gifting to a grandchild? Does that count like anything else, or do they apply a generation skipping "bonus tax" against the $1mil so that it counts extra, or against the middle generation as well?



Delroy
 
[quote author="C Delroy Spuckler" date=1250988189][quote author="awgee" date=1250935828][quote author="Minimorty" date=1250909689][quote author="mprince" date=1250908755]If you look at the link IrvineRealtor posted to the IRS it appears your wouldn't have to pay any taxes on the money gifted to a child. No matter what the amount is.</blockquote>






Even to your child, the lifetime gift tax exemption is "only" $1,000,000 per spouse.</blockquote>
Correct.</blockquote>


How do they apply gifting to a grandchild? Does that count like anything else, or do they apply a generation skipping "bonus tax" against the $1mil so that it counts extra, or against the middle generation as well?



Delroy</blockquote>
For grandkids there is a work around using a trust, but I do not know much about it.
 
[quote author="C Delroy Spuckler" date=1250988189][quote author="awgee" date=1250935828][quote author="Minimorty" date=1250909689][quote author="mprince" date=1250908755]If you look at the link IrvineRealtor posted to the IRS it appears your wouldn't have to pay any taxes on the money gifted to a child. No matter what the amount is.</blockquote>






Even to your child, the lifetime gift tax exemption is "only" $1,000,000 per spouse.</blockquote>
Correct.</blockquote>


How do they apply gifting to a grandchild? Does that count like anything else, or do they apply a generation skipping "bonus tax" against the $1mil so that it counts extra, or against the middle generation as well?



Delroy</blockquote>




I found an article that explains it decently well:



<a href="http://www.forbes.com/2009/08/17/beneficiary-exemptions-credit-personal-finance-taxes-gift-tax.html">http://www.forbes.com/2009/08/17/beneficiary-exemptions-credit-personal-finance-taxes-gift-tax.html</a>





Basically, gifts to a grandchild are treated the same as gifts to a child. However, one way to reduce taxes is to set up a dynasty trust. There is no benefit to you (you are still using up your exemptions), but there is benefit to the junior generations. The money is not taxed at every generation.
 
Is there a benefit of a 40k loan with no interest due at the end if all payments are on time vs. a gift? As far as lenders may be concerned and keeping the debt to income ratio below 28? Outside of not having to pay it back of course! I'm just looking through the lender's eyes.... and I don't know what the seller has to know.
 
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