Parents and older generations increasingly help younger family members towards the American dream by conceiving of gifts such as down payments or family home inheritances. Gifting can incur federal gift taxes based on property transfer values. In 2025, gifts below $19,000 per recipient do not require tax payment or report filing; above this amount, the giver incurs tax responsibilities. Connecticut uniquely imposes its own gift tax on such transfers, necessitating careful planning to prevent unintended financial implications.
The IRS imposes a tax on "the transfer of property by one individual to another while receiving nothing, or less than full value, in return." This applies to any transfer of property without adequate compensation.
In 2025, the federal annual gift tax exclusion is $19,000 per recipient. Gifts under this threshold do not incur federal gift tax or filing obligations.
The giver is responsible for paying any gift tax owed, which can apply if the gift exceeds the federal threshold, impacting the lifetime gift and estate tax exemption.
Connecticut imposes its own state-level gift tax, the only state in the U.S. to do so, adding complexity to property gifting.
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