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Buying or Selling a Home: Downpayment for new house 401 K vs. Inheritance Gift Tax

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Forum: Buying or Selling a HomeReplies: 7, Views: 106
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TwinLakesChef
OC, CA & Twin Lakes , IA
(Zone 4b)

March 15, 2007
9:15 AM

Post #3283735

My daughter is buying a new home. She needs 90,000 for a 20% downpayment.
Which would be more costly?

Gifting her $12,000 from both her father and I and then taking the remaining $66,000 from her 401K?

OR

gifting her the entire $ 90,000 and having to pay gift tax on the $66,000? The gift tax expense would one day come out of her inheritance.

I called the IRS and they wouldn't give me a percentage of what the gift tax would be. They referred me to their website and I down loaded a ream of info plus the gift tax filing form. I told her to call on the 401K and to ask what the penalties would be to withdraw as I understand they are all different in the way it works.

Thank you in advance for any suggestions.

arlene

NOTE:
Edited to say problem solved - you do NOT touch your 401K and we are able to give her a loan instead of gifting.

This message was edited Apr 26, 2007 4:42 AM

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