Taxes on annuities (annuity, payment, purchasing, tax)
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I have a client that is purchasing a house for about 350K. His parents will be living with him. His parents want to gift him 150K from an annuity that they have so he can use it for down payment. Is there any way that the parents can avoid paying the huge taxes on the money? Considering they will be living in the house with their son? May be add them to the deed?
I have advised them to check with a tax consultant but promised that I would ask on here for them.
I have a client that is purchasing a house for about 350K. His parents will be living with him. His parents want to gift him 150K from an annuity that they have so he can use it for down payment. Is there any way that the parents can avoid paying the huge taxes on the money? Considering they will be living in the house with their son? May be add them to the deed?
I have advised them to check with a tax consultant but promised that I would ask on here for them.
They could gift that to him and use their $1,000,000 gift tax exemption (which gives you a "pass" on about $380,000 of taxes). As the CPA about this lifetime gift tax exemption.
There are other considerations for using the annuity money--is the annuity non-qualified? Do the parents have long term care insurance-are they eligible? If so, gifting the annuity might not be the best idea. I think they REALLY need to meet with a financial planner and CPA to figure out the best way to do this.
Thank you very much all. I have put them in touch with a CPA and it all worked out today.
Naima
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