The fact is, it can be tough coming up with enough money for a down payment!
Say you needed 10%... 10% of $400,000 is a whopping $40,000!
Calculation:
$400,000 Purchase Price x 10% = $40,000 (required down payment excluding closing costs)
You've only managed to save $25,000 but you're ready to own; you're paying too much on taxes every year so the mortgage write-off would serve you well and the monthly payments are affordable. What do you do?
Lucky for you your parents really want to help and they've agreed to give you the difference for the down payment and closing costs...this is called Gift Money!
HOW DOES IT WORK? WHAT DO I HAVE TO DO?
You have to provide your lender with a notarized letter (signed by each of the givers) stating that the dollar amount given to you was a gift. Pretty simple huh? And what's great about it is that the money doesn't need to be seasoned.
Also, there is no limit with respect to dollar amount on Gift Money that you can receive but there will be tax implications to the person gifting the money for amounts beyond the $12,000 annual exclusion (you have to file a gift tax for monies beyond $12,000).
*Disclaimer: I am not a licensed CPA so please consult with your local Tax Professional for more clarity on the tax implications of Gift Money.
For more questions on how you can use Gift Money for your down payment and how to appropriately structure your next purchase, you can contact me here or call me directly at (323) 810-2175.
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