QUESTION: Hi, My husband to be and I are considering buying a home together (before we marry) that has been in his family for many years, currently his brother and wife own it and it is there primary home for over 10 years. My question is this if the house value is 240,000.00 and we get a mortgage for 200,000.00 with no closing cost for us, our gift is the 40,000.00 on paper does the brother and wife have to pay tax on the gift? And how does this effect us for taxes as well? ---------------------------------------------------------------------------- --------- david ingram replies: US citizens or residents incur a gift tax liability when they give away more than $11,000 in one year. You are buying it for $240,000. You will have a $200,000 first mortgage and your brother in law will give you a gift of $10,000 each and your sister in law will also give you $10,000 each. No gift tax because no single gift was over $11,000. Gifts are not taxable to the recipient and will not have to be put on your 1040 as income. Your ACB of the house will be $240,000. Your brother and sister in law will not have any tax to pay on any increase in value of the house over the last ten years because they are allowed to make up to $250,000 each. Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com <http://www.600am.com/> Call (604) 280-0600 to have your question answered. BC listeners can also call 1-866-778-0600. Callers to the show and questioners on this board can also attend the Thursday Night seminars on finance and making your Canadian Mortgage Interest deductible. David Ingram's US/Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Res (604) 980-3578 Cell (604) 657-8451 (604) 980-0321 New email to davidingram at shaw.ca <mailto:davidingram at shaw.ca> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com <http://www.centa.com> . 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