If you’re considering gifting $75,000 to help a family member with a mortgage down payment, understanding gift tax rules is essential. The good news? Unless you’ve gifted over $13.61 million in your lifetime, this amount won’t trigger an immediate federal gift tax. With generous lifetime and annual exemptions, most families won’t owe any gift or estate tax. Here’s how it works and what you should know.

What Is the Gift Tax?

The IRS imposes a tax on gifts where no fair market value is received in return. This includes:

• Gifts given during your lifetime (gift tax)
• Transfers made upon death (estate tax)

Gift tax rates range from 18% to 40%, but only apply if lifetime gifts exceed $13.61 million (2024 limit). The IRS also allows annual gifts of up to $18,000 per recipient without affecting the lifetime exemption. Any gift above this annual threshold reduces your lifetime exemption.

FAQ: Gifting a Down Payment & Gift Tax

Will I owe taxes on a $75,000 down payment gift?

No, unless you’ve exceeded the $13.61 million lifetime exemption, you won’t owe gift taxes—though the gift will reduce your remaining exemption.

How much can I gift tax-free each year?

You can gift up to $18,000 per recipient annually without affecting your lifetime exemption.

Can my spouse and I split a large gift to avoid taxes?

Yes, married couples can gift split, allowing a combined $36,000 per recipient annually before reducing their lifetime exemptions.

What documentation is needed for a mortgage down payment gift?

Lenders require a gift letter confirming the funds are a gift, not a loan, and may also require seasoning (keeping funds in the recipient’s account for 60+ days).

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