26 May HELPING A FAMILY MEMBER BUY A HOME
Making a family loan isn’t the only way to assist a loved one with purchasing a home. If you aren’t concerned about being paid back, a straightforward option is gifting cash. In 2025, you can give up to $19,000 to anyone without federal gift tax consequences under the gift tax annual exclusion.
If your loved one is married, you can gift up to $38,000 to the couple tax-free. If you’re married, you and your spouse can jointly give up to $76,000 to the couple, all without federal gift tax consequences (4 x $19,000).
Gifts exceeding these limits reduce your lifetime gift and estate tax exemption, which for 2025 is $13.99 million ($27.98 million for married couples) and will require filing a gift tax return.
Alternatively, if your financial situation allows it, you can purchase a home and gift it to your loved one. This transfer can be gift tax-free through a combination of your available annual exclusion and gift and estate tax exemption. It would reduce your gift and estate tax exemption by the amount of the home’s value minus your yearly exclusion. So, a single taxpayer who gifts a home worth $500,000 can subtract his or her $19,000 annual exclusion and reduce his or her lifetime exemption by $481,000 ($500,000 – $19,000).
Another option is to buy and rent a home to your family member. You can then allow the loved one to inherit it in your will when you pass away. However, this approach has federal income tax implications.
State tax consequences must also be considered. Each option has pros and cons—consult us to explore the best approach for your situation.
If any topics covered in this newsletter raise questions or if there are other accounting or tax matters on your mind, Gates Kirby & Company is always happy to provide guidance tailored to your unique situation. Our team genuinely enjoys helping clients navigate these topics with confidence. We look forward to connecting with you soon.
- Gates, Kirby & Company.
Tax laws, regulations, and interpretations can change without notice. Due to changing tax laws the content may be considered historical. Newsletter articles provide no guarantee information are complete, accurate, or current. Readers should verify applicable rules by consulting official sources (e.g., IRS, Colorado Department of Revenue) and/or consult with Gates Kirby to review how the content in the article content may be applicable to your tax situation.