Will Parents Paying a 5 Million TWD Down Payment for Their Child's Home Purchase Incur Gift Tax? Tax Authority Clarifies Key Factor Is Not 'Whose Name Is on the Title'

With housing prices remaining high, many young people need parental help to prepare down payments when buying homes. However, if parents contribute 5 million TWD at once to help their child purchase a home, will this amount be considered a gift by the tax authority? The answer is yes, it could be—and the determination is not based solely on whose name the property is registered under. Instead, it depends on who actually made the purchase, who provided the funds, and who is responsible for future mortgage payments. On February 12, 2026, the Taipei Tax Bureau of the Ministry of Finance issued a press release explaining that when children sign the purchase contract themselves and parents gift cash to cover the down payment, this differs from cases where parents use their own funds to buy the property and then register it under their child’s name. These are two distinct types of gifts, and the calculation of the taxable gift value differs accordingly. Even though parents are helping their children buy a home in both scenarios, the amount of gift tax owed can vary significantly. How much gift tax would a father pay for gifting 5 million TWD? Consider the simplest case: the child signs the purchase contract and assumes the mortgage, while the father simply transfers 5 million TWD to the child to cover the down payment. In this case, the 5 million TWD is generally considered a cash gift from father to child. On January 26, 2026, the Northern Region Tax Bureau of the Ministry of Finance stated that the annual gift tax exemption for 2026 is 2.44 million TWD per donor, calculated per individual. Regardless of how many recipients or how many times a person gifts within a calendar year (January 1 to December 31), the total exemption is capped at 2.44 million TWD. If the total annual gift amount exceeds this threshold, a tax return must generally be filed within 30 days of the gift. Therefore, if the father has made no other gifts during the year and gives 5 million TWD to his child: 5,000,000 TWD – 2,440,000 TWD = 2,560,000 TWD. This 2.56 million TWD is the taxable net gift amount. The current gift tax rate for the first bracket is 10%. Thus, the gift tax due is: 2,560,000 TWD × 10% = 256,000 TWD. According to the Ministry of Finance’s current tax brackets, a net gift amount of up to 28.11 million TWD is taxed at 10%, so the 5 million TWD example falls within this bracket. If both parents gift 2.5 million TWD each, the total gift tax drops to just 12,000 TWD. However, if the 5 million TWD is not contributed solely by the father, but rather both parents genuinely gift 2.5 million TWD each, the outcome differs. Since the gift tax exemption is calculated per donor, the father has his own 2.44 million TWD exemption, and the mother has her own 2.44 million TWD exemption. When each parent gifts 2.5 million TWD, the father exceeds the exemption by 60,000 TWD, and so does the mother. Each owes 6,000 TWD in gift tax, totaling 12,000 TWD. However, a crucial prerequisite exists: the gifts must genuinely be made separately by both parents, not merely claimed as such when the father actually provided all 5 million TWD. The tax authority evaluates gift cases based on actual transactions and fund flows. Therefore, to utilize both parents’ annual exemptions, bank transfer records and account sources should clearly demonstrate the separate nature of each gift. In other words, it is not that “a child can receive 4.88 million TWD tax-free per year,” but rather that the father has a 2.44 million TWD annual exemption and the mother has her own 2.44 million TWD—two separate exemptions belonging to two separate donors. Just because the property is registered under the child’s name does not mean only the down payment is subject to gift tax. The real point of attention is how parents assist in the home purchase. On February 12, 2026, the Taipei Tax Bureau published an official case: suppose a property is priced at 18 million TWD, with a down payment of 3.6 million TWD and a bank loan of 14.4 million TWD. If the child signs the purchase contract and applies for the loan themselves, and the father only gifts 3.6 million TWD for the down payment, with the child repaying the 14.4 million TWD mortgage, the father’s total gift is 3.6 million TWD. After deducting the 2.44 million TWD exemption, the gift tax at a 10% rate is 116,000 TWD. However, if the father himself takes out a bank loan to purchase the 18 million TWD property and directly registers it under the child’s name, the situation differs. According to Article 5 of the Inheritance and Gift Tax Act, when someone uses their own funds to purchase property for another person without compensation, it is generally treated as a gift. If the purchased property is real estate, the gift subject is the real estate itself. The gift value is not calculated directly based on the 18 million TWD transaction price. According to Article 10 of the same law, land is valued based on the announced land value, and buildings based on the assessed standard price. In the Taipei Tax Bureau’s case, the combined announced land value and assessed standard price of the 18 million TWD property totaled 8 million TWD. Therefore, the father’s total gift value is 8 million TWD. After deducting the 2.44 million TWD exemption, the gift tax due is 556,000 TWD. Even though both scenarios involve “a father helping a child buy an 18 million TWD home,” one results in a gift tax of 116,000 TWD, while the other results in 556,000 TWD—the difference lies in the transaction structure and the true funding and liability arrangements. When parents pay the down payment and also cover the mortgage, beware of additional gift tax. Another common family practice: the property is registered under the child’s name, the down payment is supported by parents, and although the child applies for the mortgage, monthly or even lump-sum repayments are actually funded by the parents. In such cases, one cannot assume that “the down payment has already been taxed as a gift, so future mortgage payments are fine.” The Kaohsiung Tax Bureau of the Ministry of Finance published a real case: a father’s son took out a 10 million TWD bank loan after buying a home but became unemployed and unable to repay. The father used his own 8 million TWD time deposit to repay the loan. The tax authority discovered this and ruled that the father had unconditionally settled his son’s 8 million TWD debt, constituting a “deemed gift.” After deducting the 2.44 million TWD exemption, the father was assessed an additional 556,000 TWD in gift tax. Article 5 of the Inheritance and Gift Tax Act also clearly states that within the statute of limitations, if someone unconditionally waives or assumes another’s debt, the waived or assumed debt shall be treated as a gift. Therefore, even if the property and mortgage are registered under the child’s name, as long as the actual mortgage repayment funds consistently come from the parents, gift tax issues may still arise. Can “parents just helping their child live” be considered living expenses to avoid gift tax? Another common misconception is that parents helping their children buy a home is a form of “living expense” and therefore should not be subject to gift tax. According to Article 20 of the Inheritance and Gift Tax Act, living expenses, education costs, and medical expenses paid by a supporter for a dependent are indeed excluded from the total gift amount. The Ministry of Finance’s tax portal website also cites parents paying their child’s living expenses as an example of this provision. However, this does not mean that any expense paid by parents for their children can automatically be classified as tax-exempt “living expenses.” A home down payment involves acquiring real estate property rights, and the Taipei Tax Bureau has explicitly used “parents gifting cash to children for down payments” as a gift tax case. Therefore, even if buying a home is for living purposes, hundreds of thousands of dollars in down payments cannot simply be deemed ordinary living expenses. If the child is about to get married, parents can use an additional 1 million TWD exemption. If the timing of the child’s home purchase coincides with their marriage, another legal provision is worth noting. According to Article 20 of the Inheritance and Gift Tax Act, when parents gift property worth up to 1 million TWD per parent during their child’s marriage, it can be excluded from the total gift amount. This 1 million TWD exemption is separate from the annual 2.44 million TWD gift tax exemption per person. Therefore, if conditions are met, the father can use both the 2.44 million TWD annual exemption and an additional 1 million TWD marriage gift exemption; the mother can do the same. On February 2, 2026, the Northern Region Tax Bureau gave an example: a couple gifted 3.44 million TWD each to their son after his marriage registration. Each used 2.44 million TWD of the annual exemption and 1 million TWD for the marriage gift, resulting in zero gift tax for both. The tax authority explained that in practice, gifts made within six months before or after the child’s marriage registration can be recognized as marriage gifts, but supporting documents such as household registration records and bank statements or remittance slips from parents and children must be prepared when filing. Therefore, if the 5 million TWD down payment is genuinely gifted 2.5 million TWD each by both parents, and the child qualifies for the marriage gift exemption, with no other gifts using the annual exemption, both parents’ 2.5 million TWD gifts fall within the allowable range, and no gift tax may be due. What the tax authority truly examines is “how the home was purchased and who provided the funds.” In summary, based on the Ministry of Finance and tax authority regulations, when parents help their child buy a home with a 5 million TWD down payment, the determination of whether gift tax applies cannot be based solely on whose name the property is registered under. If the child purchases the home themselves and bears the mortgage, and parents simply gift 5 million TWD in cash for the down payment, it is generally treated as a cash gift. If parents use their own funds—or even take out loans—to purchase the property and then register the real estate under the child’s name, it may become a real estate gift. If the mortgage is under the child’s name but ultimately repaid unconditionally by the parents, another gift may arise. For a 5 million TWD down payment, assuming no other gifts or special deductions, if the father gifts the entire amount alone, the gift tax is approximately 256,000 TWD. If both parents genuinely gift 2.5 million TWD each, the total gift tax is about 12,000 TWD. If the marriage gift exemption also applies, gift tax may even be avoided entirely. Therefore, before parents help their children buy a home, they should consider not only whose name the property will be registered under but also the contract signatory, loan applicant, actual funder, and future repayment responsibility, and keep proper records.