My father in law is giving my husband $100,000.00 as a gift. We are purchasing property with it. Do we have to pay interest or taxes on this money? Does my father in law have to pay taxes or interest on it?

Debbie

I've moved this to the Taxes forum. We have experts who monitor this forum who can help.

My understanding is that an individual can give someone $10K per year before gift taxes come into play. So your FIL could give $20K ($10 to your husband and $10 to you) without taxation. Beyond that I'm not sure who pays the taxes on the gift.

One possible way around this would be to LOAN you the $100K and forgive $10K or $20K each year as a gift.

Scott's options are valid, but there are certain "tricks to the trade" that must be considered.

Have your husband and his father seek out a local tax professional with experience in estate/gft taxes to discuss all the possible options. There are simply too many variables to properly treat this subject on this forum.

If you wish to a phone consultation, email me at [email protected] with your phone number.

My "common-sense" answer to your question would be "only if your father-in-law tells the government!" However, since you're planning on purchasing property with this cash, you will probably need to document how you acquired this sum of cash, in which case you'll need to report it as income and pay the applicable taxes.

If you act before the end of the year, you may be able to double the amount of gift that is not taxed... by being able to do it in December and again in January! Follow the advice above and find a local tax expert.

OneGuy makes a good point.

Still, send me your phone number.

Your husband will not pay any tax on the gift. The person who receives the gift does not pay any tax.

Your father in law will file gift tax return Form 709 to document the gift. A person can give any number of gifts of less than $12,000 to any number of persons. All gifts of more than annual exclusion amount ($12000 for 2007 & 2008) must be reported by the donor. There is a lifetime exclusion of $1 million. A person making a gift in excess of $12K must include the gift in the lifetime exclusion and file Form 709 to document the gift. He will not pay any tax till he exceeds lifetime exclusion limit. This will also be counted in his estate exclusion limit.

If your father-in-law is married, both he and his spouse can separately give up to $12,000 to the same person in 2007 without making a taxable gift. Since it is already December, if your father-in-law makes gifts in 2007 and 2008, he can use exclusion limit for both the years. But he will file Form 709 for both the years if amounts exceeds the exclusion limit.

Publication 950-- Introduction to Estate and Gift Taxes.
Internal Revenue Service

Noted as accurate!