Wow, there is a lot of misinformation on this thread! If the money is a gift, whether from a relative or a friend, it does not constitute a capital gain or income to you. Gift tax laws will apply, but those usually only impact the donor (giver), not the donee (receiver).
The laws referenced about using a gift as a downpayment apply when you are financing the house, but not if you are paying all cash for the property. I think David is right about having some documentation regarding these funds and their intended purpose. It would probably make the most sense for you to have an attorney draft something between you and the gift giver to clearly describe the intentions of both parties. Your attorney can then hold the funds in their trust account until you find the house you want to buy.... more