Great question! While I’m not a tax advisor (best to consult a tax professional), my understanding is as the recipient of a gift (homebuyer) does not have to pay taxes on gifted money received for down payment or closing costs. Tax implications primarily affect the person giving the gift, and even then, most people will not owe any gift tax unless they’ve exceeded their lifetime exemption. As of 2024, the lifetime gift tax exemption is $13.61 million.
A business partner without familial relationship typically would not be allowed as a gift donor for the FNMA, FHLMC, FHA, USDA or HUD 184 loans. However, as long as the business partner is not affiliated with the builder, developer, real estate agent or any other interested party to the transaction it would be allowed by VA. It is always best to check with your lender for specific scenarios.😀If we can help you with financing options, please give us a call or text at 480-725-0150.
If gift donor has gifted a amount but it reflects in his transaction history that he got that same amount of money from somewhere else how to clarify that part and what documents will be needed to clarify this thing from gift donor side to the bank who is going to provide a pre approval on house
The type of loan the borrower is using will dictate the gift documentation requirement. For example, FHA loan guidelines require the source of the gift funds be documented which is typically done with a bank statement. If the bank statement reflects a large deposit which is required to give the gift, the large deposit will need to be documented that it’s from an acceptable source as outlined in the lending guidelines. Conventional lending guidelines take a different approach on this matter. Best to talk with the lender for guidance on what the loan program guidelines require.
Federal lending guidelines require any large / irregular (above 50% of your gross monthly income) deposits be documented with a paper trail. It’s not the specific lender/bank requiring it, but rather Fannie Mae, Freddie Mac, VA, FHA with these specific guidelines for the lenders & banks to follow throughout the underwriting process of home loans.
If gifted stock via transfer is sold 'years' later for a down payment require the same reporting? Even if It wasn't earmarked for anything when gifted? If original stock was sold/traded for other stock negate the requirement? Such an odd rule. Thanks btw. subbed
Hmmmm nice....questions I'm short 3grand on the investment loan for the down payment can completely forgot of this process and spend the money on money on other things etc 😬😬 I do have the money or ways to getting the 3 grand but it's money I have in cash right now I haven't spoke to the lender yet but what are my options? Any creative thinking what's the worst that can happen?
Using cash in conjunction as part of the home loan process can be difficult. All down payment and closing costs funds must be documented in accordance with the lending guidelines to be considered allowable funds. Gift funds are not allowed on an investment property however, most loan programs allow the seller to contribute up to 2% of the purchase price toward your closing costs.
Lending guidelines require documentation of valuation for any item being sold when the funds will be used for down payment or closing costs. For example, if selling a car, you’ll need to provide documentation of the value, together with a bill of sale and receipt of funds. The valuation provided needs to substantiate the going value of the item sold. Kelly Blue Book would be a good example of how one could document the “value” when selling a car. Personal items are more difficult to document value. Be sure to talk with your lender about specifics relative to the home loan you are applying for.
Great question! It’s actually the giver of the gift, not the recipient who is subject to the gift tax. It’s unlikely, however, that you’ll ever have to pay a gift tax. The 2024 annual gift limit is $18,000, so any gift below that amount is completely ignored. However, if a gift exceeds the $18,000 limit, that does not automatically trigger the gift tax. The IRS allows a person to gift up to $13.61 million in assets or property over the course of their lifetime. If a gift exceeds the annual exclusion limit, the difference is simply deducted from the person’s lifetime exemption limit and no taxes are owed.
I have closing for my house within 30days. Can I still get gift money into my bank account? Also can I get gift money from my three brothers separately or it should be only one gift money? Thanks.
Great question! Yes, you can get a gift from all three brothers but in lieu of having them give you the money directly and due to the timing, it might be best to have them wire or provide a cashier’s check for the gift directly to the title/escrow company. Be sure to talk with your lender first and they will advise how best to coordinate getting the gift.
Do I have to pay taxes on gifted money from s relative toward a home purchase
Great question! While I’m not a tax advisor (best to consult a tax professional), my understanding is as the recipient of a gift (homebuyer) does not have to pay taxes on gifted money received for down payment or closing costs. Tax implications primarily affect the person giving the gift, and even then, most people will not owe any gift tax unless they’ve exceeded their lifetime exemption. As of 2024, the lifetime gift tax exemption is $13.61 million.
what if the lender says that they can be a business partner?
A business partner without familial relationship typically would not be allowed as a gift donor for the FNMA, FHLMC, FHA, USDA or HUD 184 loans. However, as long as the business partner is not affiliated with the builder, developer, real estate agent or any other interested party to the transaction it would be allowed by VA. It is always best to check with your lender for specific scenarios.😀If we can help you with financing options, please give us a call or text at 480-725-0150.
If gift donor has gifted a amount but it reflects in his transaction history that he got that same amount of money from somewhere else how to clarify that part and what documents will be needed to clarify this thing from gift donor side to the bank who is going to provide a pre approval on house
The type of loan the borrower is using will dictate the gift documentation requirement. For example, FHA loan guidelines require the source of the gift funds be documented which is typically done with a bank statement. If the bank statement reflects a large deposit which is required to give the gift, the large deposit will need to be documented that it’s from an acceptable source as outlined in the lending guidelines. Conventional lending guidelines take a different approach on this matter. Best to talk with the lender for guidance on what the loan program guidelines require.
Why does the bank care where your down payment comes from? I have the money, I acquired it legally, what else matters?
Federal lending guidelines require any large / irregular (above 50% of your gross monthly income) deposits be documented with a paper trail. It’s not the specific lender/bank requiring it, but rather Fannie Mae, Freddie Mac, VA, FHA with these specific guidelines for the lenders & banks to follow throughout the underwriting process of home loans.
Why is it anyone’s business to know where the money came from?
It's a lending guideline we have to follow 🙂 Thanks for watching and leaving a comment.
If gifted stock via transfer is sold 'years' later for a down payment require the same reporting? Even if It wasn't earmarked for anything when gifted? If original stock was sold/traded for other stock negate the requirement? Such an odd rule.
Thanks btw. subbed
That is a great question and probably best asked to your tax advisor.
Hmmmm nice....questions I'm short 3grand on the investment loan for the down payment can completely forgot of this process and spend the money on money on other things etc 😬😬 I do have the money or ways to getting the 3 grand but it's money I have in cash right now I haven't spoke to the lender yet but what are my options? Any creative thinking what's the worst that can happen?
Using cash in conjunction as part of the home loan process can be difficult. All down payment and closing costs funds must be documented in accordance with the lending guidelines to be considered allowable funds. Gift funds are not allowed on an investment property however, most loan programs allow the seller to contribute up to 2% of the purchase price toward your closing costs.
Can I sell personal items and have a handwritten receipt?
This is what I want to know!!!
Lending guidelines require documentation of valuation for any item being sold when the funds will be used for down payment or closing costs. For example, if selling a car, you’ll need to provide documentation of the value, together with a bill of sale and receipt of funds. The valuation provided needs to substantiate the going value of the item sold. Kelly Blue Book would be a good example of how one could document the “value” when selling a car. Personal items are more difficult to document value. Be sure to talk with your lender about specifics relative to the home loan you are applying for.
Hello can down payment and closing assistance cost be utilized at the same time ?
Yes, down payment and closing cost assistance can be utilized at the same time.
If I give my son the money as a gift for his home down payment and closing cost, does he need to pay the gift tax at the tax year of buying the home.
Great question! It’s actually the giver of the gift, not the recipient who is subject to the gift tax. It’s unlikely, however, that you’ll ever have to pay a gift tax. The 2024 annual gift limit is $18,000, so any gift below that amount is completely ignored. However, if a gift exceeds the $18,000 limit, that does not automatically trigger the gift tax. The IRS allows a person to gift up to $13.61 million in assets or property over the course of their lifetime. If a gift exceeds the annual exclusion limit, the difference is simply deducted from the person’s lifetime exemption limit and no taxes are owed.
I have closing for my house within 30days. Can I still get gift money into my bank account?
Also can I get gift money from my three brothers separately or it should be only one gift money?
Thanks.
Great question! Yes, you can get a gift from all three brothers but in lieu of having them give you the money directly and due to the timing, it might be best to have them wire or provide a cashier’s check for the gift directly to the title/escrow company. Be sure to talk with your lender first and they will advise how best to coordinate getting the gift.