Legal Question in Tax Law in Illinois

Re: Down Payment on home to adult child

A husband and a wife can each give a child (or any person) $12,000 per year without filing a gift tax return, paying a gift tax or using up any portion of their "unified credit". This is called your "annual exclusion."

Any more, and you need to file a gift tax return. Even though you need to file a gift tax return, you only need to pay a tax if your lifetime gifts over and above the annual exclusion exceed the amount of gifts covered by your unified credit. Basically, in addition to your annual exclusion, the unified credit allows you to make lifetime gifts of up to $1,000,000 (as of 2007) per donor.

So, you and your wife can give your son $24,000 in 2007 and your daughter-in-law $24,000 in 2007 and then make similar gifts on January 1, 2008 (or $96,000 in the next 60 days) without using any of your unified estate and gift tax credit.

David K. Staub, an Illinois business attorney