A closing gift for your sellers - Great! What if they are short sale sellers? Is that considered proceeds?
Many of us find it customary to provide a closing gift to our clients as a sign of good will. Perhaps it may be more common for buyers than sellers.
But for those short sale sellers, can your closing gift be considered "proceeds" from the sale?
Are you violating any restrictions by the short sale bank(s) that held the lien on the property?
Would you, in fact, be committing fraud by giving a closing gift to your short sale sellers?
In many states, you are free to provide a gift to your clients, but there is a dollar amount limit. Very commonly, it is a limit of $50. It may also be the case that the tax deduction that you can take for giving the gift, according to the IRS, is limited to $25.
But most of the time a closing gift is probably going to exceed that to make it a meaningful gesture.
What to do in the case of a short sale seller?
The funny thing is, a short sale seller is probably most deserving of a nice gesture like that if they are truly in a hardship state.
From a legal standpoint, can your closing gift truly be considered proceeds from the sale? After all, it really is a gift of your own volition that is coming out of your own income as an agent.
What is your opinion?
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