Gift Of Equity
I purchased a house valued at 420K for 240K and received from the owner a gift-of-equity letter for the difference.
I now want to sell the property to a relative for the 240 but am concerned as to how I will be affected as to the now giving of a gift of equity.
A) Tax to me as a result of giving the 180 gift, or is it act as a pass through, where just this year i received that same gift value?
B) Is there a limit to life-time gifting that I am reducing by doing this transaction?
A. Yes, selling to your relative now at $240K does create a gift tax situation. You may not actually have to pay any gift taxes on the $180K gift, but you will be required to file an informational Gift Tax Return.
B. Yes, there is a limit to life-time gifting before the Gift Tax sets in. Your gift reduces the remaining amount of your lifetime exclusion.