You may still be struggling to find the “perfect” gift for that special someone. As you consider all the options at your disposal, add one more possibility to the list: the gift of a down payment. With lenders now requiring down payments of 20% (or more), this option can help make a significant dent when your adult children are in the market for a new home. It can also make a difference in the size of your estate, saving your heirs the time and expense associated with probate.
In 2011, the gift limit of $13,000 (to a single recipient per calendar year) means that a married couple could give $26,000 to each recipient without incurring a gift tax. If combined with gifts from a second set of parents, a young couple could theoretically have more than $100,000 to put down on a house, suddenly putting a $500,000 home within their reach. Even more exciting is when a gift is bestowed at the end of one calendar year and the beginning of the next, effectively doubling a potential down payment to nearly $250,000.
As with many financial maters, the first and most important step is to consult a tax advisor to help ensure there are no unforeseen circumstances for either party at tax time. But this is one case where big things come in small packages!