|The Gift of Home|
Holiday time is when people get together with family and friends, to exchange gifts and talk about plans which often include buying or selling a house. It’s also year-end and a good time to think about estate planning and taxes. Did you know that parents, grandparents, aunts and uncles can start to pass along/gifting their estates while reducing inheritance taxes and getting to see their family enjoy the benefits of their gifts? What could be a better gift than tax-free help with a down-payment on a home?
NOTE: The following information was provided by loan officer, however you should always talk
with a tax expert and financial adviser about your specific goals and financial situation.
Gifts are involved in approximately 25% of all of the mortgage loans that are transacted. Gifts from family members and relatives are allowed under IRS and lending guidelines but lenders do not report the parties involved to the IRS.
Under current IRS guidelines (please consult your accountant for tax advice and ramifications) each parent or relative can give up to $14,000 to each child or relative every year. That would mean that a mother and father can each give $14,000 a year to each son, daughter, and/or grandchild that would amount to $28,000 a year in total. If both sets of parents want to help with the down-payment on a house; each of the parents can give each borrower a gift of $14,000 per year. That would add up to $56,000 for both of you! That is a significant amount of tax-free money to help you buy a home for your family! Of course, a gift can also be less than $14,000, so give what you can.
That amount is per calendar year and not based on every twelve months. That would mean that they could give $56,000 (or more) in December 2015 and an additional $56,000 (or more) in January 2016. There are only a few weeks left in 2015, so don’t wait! If you haven’t had the discussion yet, Thanksgiving could be a good time to bring up the subject.
For most types of mortgage loans, you will need to have 5% of the amount of the down-payment on your own, however, there are exceptions. To find out the exceptions and details about how gift money can be applied to your down-payment contact a reputable mortgage broker.
Visit www.marilynmessenger.com to see homes for sale, get the latest real estate market reports, and learn about having your own buyer agent on your side.
About the author: Marilyn Messenger, a licensed real estate broker, Certified Residential Specialist, and Accredited Buyer Representative associated with Andrew Mitchell and Company in Concord has been representing home buyers and sellers in Wayland, Sudbury, Maynard, Stow, and Concord MA since 1993. www.MarilynMessenger.com for more.