For 2009, gifts over $13K are subject to gift tax and must be reported on IRS Form 709. However, every taxpayer has a $1MM lifetime gift exclusion, meaning they can gift excess amounts up to $1MM during the course of their lifetime and not have to pay any gift taxes. They claim this exemption on said Form 709. The giftor is always the one subject to gift tax and the giftee has no reporting requirements or tax consequences. Some taxpayers take advantage of gift splitting (advantageous to married couples) and straddled gifts over several years, such as gifting $13K worth of a home each year. The maximum gift tax rate for 2009 is 45%. Please let me know if you have further questions.
So, am I reading this right that the recipient would be responsible for the gift tax, which would be what? (A ballpark figure is fine- the value of the house is about 350k) Is that the 45% you mentioned? And, (sorry for my ignorance) does that mean they would pay 45% in taxes on the value of the house?