Ways to lessen/avoid taxation on large gift of money from parents to be used on first home purchase?

Asked by Rich, Atlanta, GA Thu Aug 9, 2007

I'm looking to buy my first home. My mother is planning on giving me about 60-75% of the down payment to put toward the purchase. What are the tax implications of this? What can we do to avoid having to give a large chunk of this to Uncle Sam? She thinks we can get the home in both of our names and then in a year or so, I could simply remove her name from the deed, is that true? What would you recommend in this situation? Thanks.

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Susan Mccann, Agent, Marietta, GA
Tue Aug 14, 2007
Buy the house with her, have your name and hers on the deed. Later one party can release interest. You definitely need an attorney to advise you on exactly how this works in order to make sure you are following the legal process, but it can be done.
1 vote
Pat Albert, , 30342
Thu Aug 9, 2007
Your mother can give you $11,000 each year tax free. Your father and anyone else can do the same. If you are married you and your spouse can each receive this amount of money from as many individuals as you can find and you pay no tax. That would be $22,000 this year just from your mother to you and your husband. Or...$44,000 from your mother and father to you and your husband. No husband? Then only $22,000 from Mom and Dad in any one year.

If you can postpone closing until Jan. 1, 2008 then Mom can give you $11,000 in 2007 and $11,000 in 2008 tax free......per receiver.
1 vote
Claire Campb…, , Atlanta, N.GA Mountains, and Western NC
Thu Aug 9, 2007
Rich, as noted by Pat there are some tax restrictions on annual amounts that can be gifts. My advice would be to find a good real estate attorney who can help you structure the purchase in the most advantageous manner without running into problems later. Good luck
0 votes
Amanda Curet…, , Atlanta, GA
Thu Aug 9, 2007
It sounds like you two may want to establish what is called "equity sharing", with you being the "occupier" and your mom being the "investor". Google "equity sharing" for more information on this type of arrangement.
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