Giving Money To Living Heirs Has Major Tax Benefits
Are you thinking about contributing to your child’s first mortgage? Jamie Golombeck of CIBC Wealth Advisory outlines the tax benefits of giving money to your heirs while you are still alive. The biggest reason that people want to give their money away while they are still alive is because their kids need it immediately.
With prices of real estate being so high, people who have excess money they don’t plan on spending might want to give it away to their family sooner than later. They might want to use it to give their kids a head start in the real estate market. Having an excess of money often puts people in a very high tax bracket.
Giving it away limits the amount of capital gains tax you might have. Also, giving the money to their kids, who might be in a lower tax bracket allows them to invest the money at a lower rate.
Additionally, with people living longer, the recipient of an inheritance would not receive it until much later in life. If you plan on giving a substantial gift before you die, be completely sure that you do not need the money.
Once the money is given away, it is hard to get it back. Make sure you have done a financial plan for yourself, and that no matter what situation arises, you have enough money to take care of yourself.