Pay off second loan or invest cash elsewhere?

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DEAR BENNY: I am considering paying off the second loan for my daughter on her house. Are there any tax consequences for either of us? --Anita DEAR ANITA: Currently, under federal law, you have the right to gift your daughter (or anyone for that matter) up to $12,000 annually without filing a gift tax return or paying tax. If your daughter is married, you can also gift up to $12,000 to your son-in-law. And if you are married, you and your husband can each give up to $12,000 to the daughter and son-in-law for a total of $48,000 gift tax-free. The gift in any amount is tax-free to your daughter. However, should you gift her more than the $12,000, there are gift tax implications for you. You will not have to pay any federal tax for this extra gift -- as long as your total lifetime gifts have not yet exceeded $1 million, but you will have to file a gift tax return and it may impact on your estate when you die. This is rather complicated and you should consult your own tax advi...