The federal gift tax is a tax on the transfer of property from one individual (the donor) to another (the donee) when the donor receives nothing—or less than full value—in return. The tax applies whether the donor intends the transfer to be a gift or not.

The gift tax applies to the transfer of a gift of any type of property. You make a gift if you give property (including money) or the use of or income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

For additional information, see Internal Revenue Service (IRS) Form 709 and its instructions.

In New Mexico, as in all states, the federal gift tax applies to transfers of property where the donor does not receive full value in return. This includes money, real estate, and other types of property. If a person gives a gift that exceeds the annual exclusion limit set by the IRS, they may need to file a Form 709, which is the United States Gift (and Generation-Skipping Transfer) Tax Return. For 2023, the annual exclusion amount is $17,000 per recipient. Gifts that do not exceed this amount per year per recipient do not require filing a Form 709. Additionally, there is a lifetime exemption amount that applies to gift and estate taxes combined. It's important to note that New Mexico does not impose a state gift tax, so only the federal regulations apply. Taxpayers in New Mexico should consult with an attorney or a tax advisor for personalized advice, especially when considering making a significant gift or if their gifts in total approach the lifetime exemption limit.