Tips for Gifting a Home Down Payment

Tips for Gifting a Home Down Payment to Your Child

Your child just got married and you’ve decided that gifting a down payment is something you want to do for him or her. However, keep in mind that there are limits and rules pertaining to this type of gift. Knowing them will keep you from making a giant financial mistake when helping your daughter buy her first Ardrey house for sale. Read on for tips for gifting a home down payment!

The Down Payment Must be a Gift, Not a Loan

If you plan on helping out your kids, the down payment must be a gift and not a loan. In order to prove this, the parents will need to write a letter to the lender stating that the money never needs to be paid back.

Otherwise, the lender will factor in the loan amount from the parents into the mortgage approval amount. This may mean you qualify for less on a home for sale in Ardrey.

The Tax-Free Limits

Remember the limits when gifting a down payment. Any gift of $14,000 or more will result in a tax bill. However, there is a loophole that is possible if done right. The rule says $14,000 per year per donor, so technically, each parent could give $14,000 for a total of $28,000 in a year.

It’s best to talk to your lawyer and work out the details if you are planning on going this route.

Provide the Down Payment in Advance

It is important to give the down payment well before your child chooses an Ardrey home for sale. Getting this money during the early stages of home buying saves paperwork and logistical headaches.

If the funds have been in your child’s account long enough so that the last two bank statements don’t show the deposit, the gift does not have to be addressed.

Do you have any tips for gifting a home down payment? If you are an individual who has done this, we would love to hear your personal experience!