The federal gift tax is a tax on the transfer of property from one individual (the donor) to another (the donee) when the donor receives nothing—or less than full value—in return. The tax applies whether the donor intends the transfer to be a gift or not.
The gift tax applies to the transfer of a gift of any type of property. You make a gift if you give property (including money) or the use of or income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.
For additional information, see Internal Revenue Service (IRS) Form 709 and its instructions.
The federal gift tax is applicable to any transfer of property where the donor does not receive full value in return, and it is enforced regardless of the donor's intent. This includes money, real estate, or other types of property. In Texas, as in all states, the federal gift tax rules apply. If a person gives a gift of property, money, or an interest-free or reduced-interest loan, they may be subject to the federal gift tax if the value of the gift exceeds the annual exclusion limit set by the IRS. For 2023, the annual exclusion amount is $17,000 per recipient. Gifts above this amount may require the filing of IRS Form 709 to report the gift. The lifetime gift and estate tax exemption is also relevant, which for 2023 is $12.92 million. This means that an individual can give away up to this amount over their lifetime without incurring federal gift tax. It's important to note that Texas does not impose a state gift tax, so only the federal regulations apply. Taxpayers in Texas should consult with an attorney or tax advisor for personalized advice, especially when dealing with significant gifts or complex financial situations.
