Submitted By: Robert
Answered: June 25, 2013 8:30 am

I paid off my son’s mortgage of $30,000. How do I treat this for tax purposes?

For income tax purposes, you cannot take a deduction for this payment and your son is not taxable on it (it’s a gift to him). For gift tax purposes, the first $14,000 is excluded ($28,000 if your spouse consents to split the gift). The excess is a reduction in your lifetime gift tax exemption amount. The lifetime exemption amount is $5 million indexed annually for inflation, making it $5.25 million in 2013.

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Tax Glossary

Capital loss carryover

A capital loss that is not deductible because it exceeds the annual $3,000 capital loss ceiling. A carryover loss may be deducted from capital gains of later years plus up to $3,000 of ordinary income.

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