San Antonio, TX asked in Real Estate Law and Tax Law for Texas

Q: Father is providing $250K cash to help purchase land. Will this fall under Lifetime Credit Tax Exp or will he be taxed?

Father-in-law giving $250,000 to help purchase a property that is $500,000. This Texas property is 30 acres plus home. Will he be taxed on that "gift" or does it fall under the Lifetime Credit Tax Exemption? Additionally, it's not really a gift as we are leasing him 25 of the acres to graze his animals. He would just pay the taxes on that 25 acres. 5 acres plus house will belong to wife and myself. Is this legal? Appreciate any advice you can offer. Thanks.

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1 Lawyer Answer
Kacie Marie Czapla
Kacie Marie Czapla
  • Tax Law Lawyer
  • Tyler, TX
  • Licensed in Texas

A: Short answer is yes he must file a gift tax return. However, there is a lifetime exemption amount of $11,700,000 per person. That means that your father can gift up to $11,700,000 tax free during and after his life via gifts and his estate. The lease does not matter. It is still a gift if you are transferring ownership. Note that he must file a gift tax return because his gift is greater than the personal exemption of $15,000 ($30,000 in your case because the gift is made to you and your wife).

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