How to gift $25,000 to newlyweds

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 Q. My son is getting married and I want to give them a gift of $25,000. What gifting rules should I worry about, or instead, should I just tell them about the money and then put it as a down payment on their house when they’re ready to buy one?

A. That’s a very generous gift, and you’re right. Now is a good time to review gifting rules.

The IRS defines a gift as something of value given to another individual when that individual gives nothing in return, said Mary Pucciarelli, a financial advisor with the MetLife Premier Client Group in Piscataway.

So regardless of when you give the money to the newlywed couple and how they use it, it will be considered a gift by the IRS.

The good news is that under the 2015 IRS regulations, anything under $14,000 for an individual or $28,000 for a couple is not subject to the gift tax, so a $25,000 gift to your son and his wife would not be subject to this tax, she said.

“To help ensure that the couple is able to get the most out of the money, I’d recommend that you let them know about it and have a conversation with them about what they’d like to use it for,” Pucciarelli said.

How they plan to use the money will impact where they should park the money until it’s spent.

If they feel they’d like to use it for something in the next three years, such as a down payment on a house, they’ll want to invest it in accounts that are more liquid, such as Certificates of Deposit or money market accounts, Pucciarelli said.

If their time horizon is longer than three years—perhaps they’d like to use the money to start saving for their children’s education, for example—then liquidity is less of a concern and they’ll want to invest in instruments with greater potential for growth, like mutual funds, stocks and bonds, she said.

Also not that while you’re considering waiting to give the gift so it can potentially go towards a home, if they’re going to apply for a mortgage and the gift money is part of the down payment, the bank may require proof that it’s a gift. The couple and you may find you have less paperwork if the money is in their account — rather than yours — when they start the mortgage process.

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This story was first posted in June 2015. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.