Legal Question in Real Estate Law in California

Re: Son's First Home Purchase

You need to consult with two professionals to answer your question. First, there is still a gift and inheritance tax in the US. You need to review with either a tax attorney, or a CPA what the limits are before the gift will be taxed, or be prepared to pay the tax. You also want to determine if there are any state-specific issues related to taxation of gifts of money. Because tax is such a specialized area, you really do need to speak with a tax professional to answer that part of the question. The second professional you need to consult is a good, honest loan officer. Lenders have restrictions on how much of a buyer's downpayment can come from a gift. Fannie, Freddie and FHA all have rules regarding gifts. You need to consult with someone who actually works with acronym financing, or alternatively private money to tell you what the rules are today. They literally are changing the underwriting rules on a daily basis, and with the recent takeover of Fannie & Freddie, you're going to see a lot more instability and change in the financing markets. Finally, if it is a true gift, then you should be finished after you get the foregoing advice. If, however, you intend to take an interest in the property to guarantee repayment, or you are doing this as a form of equity sharing, you need to retain a real estate attorney to draft the proper documentation for you. Good luck.

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