Declaration of Gift
Definition and meaning
The Declaration of Gift is a formal document used to transfer ownership of a specific property or asset from one individual, known as the donor, to another, referred to as the donee. This legally binding statement clarifies the donor's intention to give a gift without expecting anything in return. It is essential for ensuring that the transfer of ownership is recognized and enforceable under the law.
Who should use this form
The Declaration of Gift is suitable for anyone desiring to make a non-recurring gift of property to another person. This may include individuals giving gifts of personal property like vehicles, jewelry, or real estate. It is particularly useful for:
- Individuals planning to gift valuable items to family members.
- Parents transferring property to children.
- Donors wishing to clarify ownership transfer for tax or estate planning purposes.
Key components of the form
A typical Declaration of Gift includes several key components to establish the validity of the gift:
- Donor's Information: The name and address of the person making the gift.
- Donee's Information: The name and address of the person receiving the gift.
- Description of the Property: A detailed description of the property being gifted, including any identifying details.
- Signature: The donor must sign the document for it to be effective.
These elements ensure clarity and help prevent disputes regarding the ownership transfer.
How to complete a form
Completing a Declaration of Gift involves several straightforward steps:
- Gather the necessary information, including all required personal details of both the donor and donee.
- Clearly describe the property or asset being gifted, ensuring that any distinguishing characteristics are mentioned.
- Complete the document by filling in all specified fields accurately.
- Have the donor sign and date the form to validate the transfer.
It is recommended to have a witness present when signing the document to strengthen its legal standing.
Common mistakes to avoid when using this form
When completing a Declaration of Gift, it's important to avoid common pitfalls:
- Insufficient Description: Failing to provide a clear and detailed description of the property may lead to confusion or disputes later.
- Not Signing the Document: The declaration must be signed by the donor; otherwise, it will not be legally binding.
- Ignoring State Requirements: Some states may have specific regulations regarding gifts, so it’s crucial to be informed of these rules.
What documents you may need alongside this one
To ensure a smooth transfer process, consider having the following documents in addition to the Declaration of Gift:
- Proof of Ownership: Documentation that confirms the donor is the rightful owner of the property being gifted.
- Witness Statement: A signed statement from a witness can add credibility to the declaration.
- Tax Documents: Depending on the value of the gift, tax implications may arise, so retain any relevant tax forms that may be necessary for reporting purposes.
Form popularity
FAQ
Filing Form 709 Generally, when a gift over $15,000 is made to one person, the donor is required to file a Form 709, United States Gift (and Generation-Skipping Tax) Tax Return. For 2018, the IRS increased the gift tax exclusion to $15,000.
The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value. You make a gift when you give property, including money, or the use or income from property, without expecting to receive something of equal value in return.
The donor's name, address, phone number, and their relationship to you. The amount of money they are giving you (exact dollar amount). The date of the gift / donation. A statement verifying that they do not expect repayment.
As it applies to your mortgage, a gift letter is a note from the donor that says you don't have to pay the money back. If you're using gift money as part or all of your down payment, you'll need the donor to write a gift letter to your mortgage company that makes it clear that the money is a gift and not a loan.
The parties declare the full name of the person giving and receiving the gift, their relationship to them and the purpose.The parties declare the gift amount and this should include all money being gifted toward the purchase including the gifted deposit and purchase costs.
The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value. You make a gift when you give property, including money, or the use or income from property, without expecting to receive something of equal value in return.
The donor's name, address and phone number. The donor's relationship to the client. The dollar amount of the gift. The date the funds were transferred. A statement from the donor that no repayment is expected. The donor's signature. The address of the property being purchased.
If you gave gifts to someone in 2020 totaling more than $15,000 (other than to your spouse), you probably must file Form 709. Certain gifts, called future interests, are not subject to the $15,000 annual exclusion and you must file Form 709 even if the gift was under $15,000.
Both the giver and the homebuyer must sign the letter, which doesn't have to be notarized. Conventional-loan requirements include extra steps If the down payment is made up of gift money and the borrower's own money.
