My mother wants to give us cash to buy a house with, what's the smartest way to do that so that it saves us money?
The first question to be asked is, how much money is she giving you? The annual gift tax exclusion for 2015 is $14,000 per person. If your mother is married then you will be able to receive $28,000 gift tax free in 2015. From your question, and the use of "us" I will assume you are married or have a significant other. Your significant other is entitled to a additional $28,000 tax free gift from your mother and her spouse, for a total of $56,000 gift tax free dollars. If the amount she plans on gifting you is greater than her annual gift exclusion allowance then I would advise you and your mother to speak with your CPA or EA about the use of your lifetime gift exclusion ($5.43 million in 2015) and filing a Form 709: U.S. Gift (and Generation-Skipping Transfer)Tax Return in the year of the gift. | 10.26.15 @ 22:03
Aside from the tax aspect of your situation, from a lending perspective, gifts are a common source of down payment money. The parent (or family member) and recipient must sign gift letters stating the amount of the gift and that no repayment is expected. As a national lender, I have to document the transfer of funds with cancelled checks, wire confirmations, etc, and we also have to verify the giver had the funds (to ensure the seller didn't "give" the money to the parent as an inducement to purchase the home. Probably 40% of the first time buyer loans I do across the country involve a gift of some sort. Feel free to shoot me an email through my profile if you have any other questions, and hope this helps! Ted | 10.27.15 @ 19:09
Smartest way is to spend a few hours with one financial adviser whom you can trust to and give him all facts about your mom's financial statu,s and yours. Also consult with tax adviser too, and then make your final decision. | 10.28.15 @ 05:35