Re: gift for down payment, tax advice

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Posted by Christine Baker on October 17, 1998 at 18:38:46:

In Reply to: down payment posted by Nancy on September 28, 1998 at 11:36:16:

: Six years ago, we had a foreclosure. Our credit was ruined, so my parents purchased a condex in their name for our family to live in. We provided the downpayment and make the payments.

: Now we are ready to try again. We want to use the equity in the condex as part of our downpayment. Would this money be considered "ours" or a gift from my parents? Is there a limit to how much of a downpayment can be a gift? What are the ramifications, tax-wise and other-wise, of using this money?

: Thanks.

You are asking a lot of questions which I could only answer after spending at least several hours reviewing your credit, your loan application, your tax returns, etc. etc.

"Maybe" you should add yourselves to the title. Otherwise the lender will consider the proceeds of the sale a gift. You'll get better loan terms if the downpayment or at least some of it is YOUR money. Taking the parents off title might trigger the existing lender to call the loan, but you can have the parents taken off before you sell.

Discuss the matter with a CPA or tax attorney. The tax consequences depend on your and parents' financial situation, the value of the property, etc.
Free advice is worth pretty much what you paid for, so pay for it and get it in writing.

Be sure to have the cancelled checks for the mortgage payments for AT LEAST 12 months to establish your financial responsibility for the new lender if your parents are still on title. Read the Loan Shopping Page, get your Scores, etc, etc. etc.... Then talk to some mortgage brokers, act only on what you get in writing.

Good luck!

Christine

Shopping for a Mortgage

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: : Six years ago, we had a foreclosure. Our credit was ruined, so my parents purchased a condex in their name for our family to live in. We provided the downpayment and make the payments.

: : Now we are ready to try again. We want to use the equity in the condex as part of our downpayment. Would this money be considered "ours" or a gift from my parents? Is there a limit to how much of a downpayment can be a gift? What are the ramifications, tax-wise and other-wise, of using this money?

: : Thanks.

: You are asking a lot of questions which I could only answer after spending at least several hours reviewing your credit, your loan application, your tax returns, etc. etc.

: "Maybe" you should add yourselves to the title. Otherwise the lender will consider the proceeds of the sale a gift. You'll get better loan terms if the downpayment or at least some of it is YOUR money. Taking the parents off title might trigger the existing lender to call the loan, but you can have the parents taken off before you sell.

: Discuss the matter with a CPA or tax attorney. The tax consequences depend on your and parents' financial situation, the value of the property, etc.
: Free advice is worth pretty much what you paid for, so pay for it and get it in writing.

: Be sure to have the cancelled checks for the mortgage payments for AT LEAST 12 months to establish your financial responsibility for the new lender if your parents are still on title. Read the Loan Shopping Page, get your Scores, etc, etc. etc.... Then talk to some mortgage brokers, act only on what you get in writing.

: Good luck!

: Christine

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