Gift money and taxes

[TokyoBoglehead]

It's important to note that if you are not the registered owner of the property, you cannot claim the deduction. It is a gift to a direct descendant specifically for the purpose of enabling that descendant to buy the property. Partial ownership qualifies, but a partner or even a spouse cannot benefit from a gift from the other spouse's parents to buy housing.

How is that benefit measured, are you talking purely in terms of receiving funds from a party? There are clear indirect benefits of your spouse receiving tax-free money to purchase a shared property.

[ClearAsMud]

No question about the indirect benefits of a spouse receiving a tax break. My comment was directed toward OP's specific situation, which seemed to indicate that OP was the gift recipient but the partner was the likely mortgage holder (i.e., the actual property owner). The question under consideration was whether OP could directly take advantage of the special gift-tax deduction for housing. The partner would not be able to do so in any case because gifts from in-laws do not qualify.

For OP to be eligible for the deduction, the gift must have come from a parent or grandparent, must have been used toward purchase of the property, and the property must be registered in OP's own name. I mentioned the possibility of partial ownership (joint ownership, or mochibun) on the off-chance that OP contributed something toward the property's purchase and may therefore have been registered as a joint owner, which would theoretically allow OP to to claim a deduction for the gift up to the amount contributed toward the purchase price (within the maximum allowable deduction).

But if the property -- already purchased and registered -- is listed only under the partner's name and if the partner's name is the only one on the purchase agreement, OP is ineligible for the deduction and unfortunately must find another way to save on gift taxes.

The deduction itself is well worth keeping in mind. It's one of the few ways in Japan that relatively large amounts of assets can be transferred tax-free to the next generation other than by dying, even if a couple of disadvantages do exist. Also, both spouses can take advantage of this particular break by receiving separate gifts from their respective parents/grandparents, which are then reported on separate gift-tax returns.

[Michel]

Seems like things won't go smoothly, thank you for the detailed information.

You are right in assuming that the loan isn't under my name whatsoever, and to make things more complicated we are not officially married (we will be next month though).
I will still go to the tax office (with the holiday I might have to wait a little) and hope that they'll be somehow helpful.

[Gulliver]

Have your parents adopt your wife.

[adamu]

I read a blog post recently by a guy who's wife passed away, and the family basically turned on him as soon as she was gone and pulled all sorts of tricks to get him to sign over the house etc. Unfortunately I can't find it now.

[RetireJapan]

I read a blog post recently by a guy who's wife passed away, and the family basically turned on him as soon as she was gone and pulled all sorts of tricks to get him to sign over the house etc. Unfortunately I can't find it now.

We put that in a Monday Read. It seems the backstory was a bit more nuanced. The main moral of the story for me was understand how inheritance works here and get a will if you don't like the standard division.

[TokyoBoglehead]

I read a blog post recently by a guy who's wife passed away, and the family basically turned on him as soon as she was gone and pulled all sorts of tricks to get him to sign over the house etc. Unfortunately I can't find it now.

We put that in a Monday Read. It seems the backstory was a bit more nuanced. The main moral of the story for me was understand how inheritance works here and get a will if you don't like the standard division.

I believe the other side of the story (Completely non-objective, third hand etc etc).Was that his wife worked herself to the bone, and he essentially only pursued his hobbies and did not contribute financially.

[Michel]

So I went to the tax office today, and as expected I was unable to pass the gift money into the loan in order to avoid taxes.

Just as a reminder, the loan isn't under my name so that was pretty much it, and also not currently married made it even more difficult.
I was advised to send back the money that I received over 110万円 before the end of the year and that way I won't need to fill anything and tax free.

[Beaglehound]

So I went to the tax office today, and as expected I was unable to pass the gift money into the loan in order to avoid taxes.

Just as a reminder, the loan isn't under my name so that was pretty much it, and also not currently married made it even more difficult.
I was advised to send back the money that I received over 110万円 before the end of the year and that way I won't need to fill anything and tax free.

Gotta love the tax office here at times. Telling you how to game their system

[RetireJapan]

Gotta love the tax office here at times. Telling you how to game their system

The one time I've gotten in trouble with the tax office here, the guy I was talking to spent about twenty minutes making up fake expenses for me ("printer ink? You must have bought some printer ink...") so that I wouldn't have to pay too much in taxes that I owed