16 Jan How can I help my daughter pay her mortgage?

Q. If I want to help my daughter pay her mortgage, would it be better to pay the mortgage company directly or give her the money?
— Parent

A. That’s very generous of you.

It seems you don’t own any interest in the property.

But if you did, and if you signed the mortgage documents as a co-borrower on the loan, then making payments directly to the lender would not be a gift because you would be paying down a debt that you owe, said Yale Hauptman, an estate planning attorney with Hauptman and Hauptman in Livingston.

But if this is not your legal obligation to pay – meaning you did not sign any papers legally committing you to pay the loan and you did not receive the benefit of the funds borrowed – then you’re looking at making a gift, Hauptman said.

It’s a gift whether you make payments directly to the mortgage company or give the money to your daughter.

In 2020, you can make gifts totaling $15,000 per person per year without being subject to potential gift tax.

He said if you give any one person more than that in one year, then you are required to file a gift tax return.

There isn’t necessarily tax due on the gift, though. You can use some of your lifetime exemption, which is now at $11.58 million per person. As long as you don’t exceed that number, no gift tax will be owed.

Also keep in mind that if you are married, you and your spouse can give your daughter $30,000. And if your daughter is married, you and your spouse could give each of them $30,000 a year for a total of $60,000 without having to file a gift tax return.

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This story was originally published on Jan. 16, 2020.

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