Under federal tax law, the responsibility for the gift tax does not fall on the recipient. Instead, the person who gives the gift, known as the donor, is responsible for paying any applicable gift tax. The Internal Revenue Service (IRS) provides the donor with tools to manage this potential tax liability, meaning in many cases, no tax is actually paid.

The primary tool is the annual gift tax exclusion. For 2024, a donor can give up to $18,000 to any individual without triggering a gift tax or needing to file a specific tax form. Since a house is almost always worth more than this amount, the donor will need to file a gift tax return using IRS Form 709. This form discloses the gift to the IRS.

Filing Form 709 does not automatically mean the donor owes tax. The value of the gift above the annual exclusion is applied against the donor’s lifetime gift tax exemption. For 2024, this lifetime exemption is $13.61 million per individual. Only when a donor’s total lifetime gifts surpass this amount does an actual gift tax become due.