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how do you gift someone a down payment for a home


Our oldest daughter is getting married in a few months and we would like to gift her and her future husband a down payment on their first home together. What is the best way to go about this? Should we talk to the lender with them, or simply gift them the money once they find the house they would like to purchase? We’re sure you’ve had experience with something like this in all your years in real estate. What would be the best practice?

Thank you!
Rebecca, Fruita


Wow… guys are very generous and that is an amazing “gift” to offer them. Many times saving up for the down payment is one of the largest hurdles in obtaining home ownership. As I typically do with questions like this, I get help from a lending professional to make sure that the information I provide is accurate, because providing inaccurate information can provide painful lessons after the fact…..And I certainly like to avoid painful lessons. Funny, my Mom would tell you that early in life I seemed to thrive on painful lessons as it appeared I enjoyed learning them over and over, but as I age those painful lessons become a much more significant deterrent. Anyways, in this instance, I am turning to James Pulsipher at Fidelity Mortgage here in Grand Junction. 
“Lending guidelines across all loan types will allow for the gifting of funds from a family member to assist in the purchase.   It is important to also consult a tax advisor to be certain of the best way to handle the gift for IRS purposes.   The IRS sets an annual limit on the amount of gift you can provide before there are tax consequences.   The amount of the gift, and the tax ramifications would determine which option would be the best.  There are two ways that you could provide funds to assist in their purchase.

First, you could simply gift funds.  The lender will want to see a gift letter (which they will provide) and that will paper trail the funds from your account to theirs.   This method would be best in the case that the gift doesn’t exceed the IRS limits, and there would be no tax consequence.

The second option would be more applicable if you want to have an interest in the property, or later expect repayment of the gift, and may also be a valuable tool to avoid gift taxes, if the gift is larger than the IRS limits.  With this method, you would take title to the property with them (you do not have to be a party to the loan, or obligated to the loan to do this).   By doing this your funds aren’t a gift, but your investment into the property which would give you a way to avoid gift taxes, and secondarily offer a way to insure repayment of the gift down the road if that is a goal.”

There you have it!  Either of these options will prove to be sound and you can choose which route best fits your situation.  Also, you can reach James at 970-242-7000 should you have any further questions or need more clarification. Best of luck and happy house hunting to your daughter and soon to be son in law.

Dave Kimbrough
The Kimbrough Team



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