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The Gift Tax Myth: How it Impacts You

How does the gift tax work when using gift funds to buy a home? $16,000 Annual Exclusion The federal government gives each of us an allowance to gift anybody $16,000 per year without incurring any gift tax. This $16,000/year replenishes every year, and it’s $16,000 per person. So, theoretically, I could gift every person that I know $16,000 today, and then another $16,000 next year and the year after, and there would be NO gift tax. This $16,000 limit is up from $15,000 in 2021. $12,060,000 Lifetime Exclusion What most people don’t realize, is that there’s a second allowance of $12.06mm! This is up from $11.7mm in 2021. In other words, let’s say that I want to give you $116,000. That’s $100,000 more than