What is a Gift Tax?

A gift is a transfer of property for which you receive nothing (or less than fair market value) in return. For example, you have made a gift if you give someone a check for $10,000. Or, if the fair market value of your house is $140,000 but you sell it to your daughter for $25,000, you have made a gift of $115,000 to her.

Not all gifts are taxable. For example, in 2020 you can give up to $15,000 to an individual which will not be taxable. Gifts between spouses are not taxable, either. However, if you make a taxable gift, you must file a gift tax return. Gift tax is rarely paid during the giver’s lifetime because of the high gift tax exemption threshold.