gift-giving
My husband and I own our present house, we have about $40,000 equity. We would like to buy a bigger, more expensive home. My father wants to gives us a lot of money to help us finance it. The question(s):
How much can he give us? (We know that $10,000 per year is tax free) Can he give me $10,000 plus my husband $10,000?
What are the taxes if we do have to pay?
Is there any way we can "borrow" extra money from him? Would our bank accept his money, and approve us for a larger mortgage even if we don't really intent to re-pay his "loan"? (or if we're not capable of re-paying him, presently?)
Is there a way to make him a co-owner? Can his name ever be dropped from the mortgage in the future? Can we do it, or is he the only one able to?
How can we accept as much as he's wanting to give us, legally and hopefully, tax-free? He'd like to give us about $40,000 for a bigger home.
Thank you.
1 Answer from Attorneys
Re: gift-giving
Your father may give you $10,000 and may give your spouse $10,000 tax-free each calendar year. He will not be charged gift tax, and you and your spouse will not be charged income tax on the gifts, provided that they do not exceed those amounts.
You could borrow additional money from him; however, you will have to disclose the source of those funds, if the bank loan application requires that information. If you falsely state on the application the source of funds being used for the purchase of the house, the bank might be entitled to legal relief, including calling the loan due and payable immediately. Whether the bank will accept your using money borrowed from your father is a matter of internal bank policy. You should check with the bank to determine what it will permit.
The balance of your questions raise a number of tax and liability issues, for which you and your spouse should consult an attorney. The particular facts and circumstances of your respective financial and tax status must be analyzed and considered, in order to provide you with legal advice concerning this matter. It is impossible to consider and address all of the possible implications of these questions in this response.
This response is not intended as legal advice, and it may not be relied upon as legal advice. No attorney/client relationship has been created as a result of this response.
Stephen Scapelliti
Couzens, Lansky, Fealk, Ellis, Roeder & Lazar, P.C.
39395 W. Twelve Mile Road, Suite 200
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