My question is: US-specific
QUESTION: I live in the state of Georgia. My mother has recently sold some
real estate property. She is planning on giving me $50,000, which I will use
to invest in a new home. What are the gift tax laws pertaining to this
monetary gift?
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david ingram replies:
There is no gift tax or inheritance tax in Georgia.
Federally, the annual gift tax exclusion was $11,000 in 2004 and I think l
is still that amount for 2005.
If your mother gives you $50,000 she must file form 709. As long as her
amount is less than her lifetime limit ($1,500,000), there will be no gift
tax at this time but she must file form 709. Technically, the first $11,000
is tax free but the $39,000 balance does not create a tax now because it can
be reduced by using the lifetime unified credit which applies to estates and
gifts. (This is complicated - if she is going to give you the money,
consult a local attorney or Enrolled Agent or a tax specialist CPA -
remember that an enrolled agent has likely had five to ten times more
training in tax than the typical (not all) CPA).
Using the exclusion option will reduce the amount available to offset the
Estate Tax upon your death.
On the other hand, if you decide to report and pay the tax, and later die,
the previously taxed gifts are added back to your estate, the Estate Tax
recalculated, and the amount of Gift Taxes you previously paid on the excess
are credited against any final Estate Tax due.
We can do the returns here for your mother but it is just as well to deal
with a local person for the future. If there was a Canadian or Mexican
involvement, I would try and get you to send it to us but there are at least
987 people in Georgia who can do it for you.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
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