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Old 04-10-2024, 06:56 AM
 
24,475 posts, read 10,804,014 times
Reputation: 46746

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Quote:
Originally Posted by WorldKlas View Post
Absolutely doesn’t apply. None of States involved of on the property, any of my homes, or son’s present residence collects taxes on gifts nor considers cash gifts as income. In our case the money will be paid by me at time of settlement. The house will be titled with my son’s name on it….. however that works either as trust, jointly, me as lienholder…
So it will not be a gift.
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Old 04-10-2024, 07:26 AM
 
Location: 89052 & 75206
8,144 posts, read 8,338,067 times
Reputation: 20063
Quote:
Originally Posted by Threestep2 View Post
So it will not be a gift.
I will be providing the money. It will be titled in the most effective way possible to protect the asset. You can call it whatever you want. The IRS calls it a gift if I give the money directly to my son. I really don’t care what its called.

Your posts seem to imply that its really important to you that I declare if its a gift or not, and if a gift that its strange I am concerned about how its titled. However I’m writing the check and I never declared I give money unconditionally while I am alive. I am providing funds to facilitate my son’s desire to reunify property from his family’s original homestead.

The Golden Rule: the one who has the gold makes the rules.
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Old 04-10-2024, 09:26 AM
 
Location: Sarasota/ Bradenton - University Pkwy area
4,612 posts, read 7,529,570 times
Reputation: 6026
Quote:
Originally Posted by WorldKlas View Post
I will be providing the money. It will be titled in the most effective way possible to protect the asset. You can call it whatever you want. The IRS calls it a gift if I give the money directly to my son. I really don’t care what its called.

Your posts seem to imply that its really important to you that I declare if its a gift or not, and if a gift that its strange I am concerned about how its titled. However I’m writing the check and I never declared I give money unconditionally while I am alive. I am providing funds to facilitate my son’s desire to reunify property from his family’s original homestead.

The Golden Rule: the one who has the gold makes the rules.
Have you thought about the option of you purchasing the property outright and then doing owner financing for your son to purchase it from you? He'd get the property he wants but you would have more protection of your investment in the property from things such as lawsuits against your son.

As others have said, it's important to talk with an attorney about the best way to approach this to protect yourself as well as your son.
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Old 04-10-2024, 12:03 PM
 
24,475 posts, read 10,804,014 times
Reputation: 46746
Quote:
Originally Posted by WorldKlas View Post
I will be providing the money. It will be titled in the most effective way possible to protect the asset. You can call it whatever you want. The IRS calls it a gift if I give the money directly to my son. I really don’t care what its called.

Your posts seem to imply that its really important to you that I declare if its a gift or not, and if a gift that its strange I am concerned about how its titled. However I’m writing the check and I never declared I give money unconditionally while I am alive. I am providing funds to facilitate my son’s desire to reunify property from his family’s original homestead.

The Golden Rule: the one who has the gold makes the rules.
Please read the title of your thread - Giving son money to buy a house. It sounds like it will be your property. MIL tried to pull something like this a long time ago.
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Old 04-10-2024, 01:29 PM
 
Location: 89052 & 75206
8,144 posts, read 8,338,067 times
Reputation: 20063
Quote:
Originally Posted by Threestep2 View Post
Please read the title of your thread - Giving son money to buy a house. It sounds like it will be your property. MIL tried to pull something like this a long time ago.
Don’t visit your own issues on this situation. The post was asking how to Title the property. Its not your business if you cannot contribute to the topic.
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Old 04-15-2024, 09:03 AM
 
Location: Florida & Arizona
5,975 posts, read 7,365,693 times
Reputation: 7591
Quote:
Originally Posted by WorldKlas View Post
I will be providing the money. It will be titled in the most effective way possible to protect the asset. You can call it whatever you want. The IRS calls it a gift if I give the money directly to my son. I really don’t care what its called.

Your posts seem to imply that its really important to you that I declare if its a gift or not, and if a gift that its strange I am concerned about how its titled. However I’m writing the check and I never declared I give money unconditionally while I am alive. I am providing funds to facilitate my son’s desire to reunify property from his family’s original homestead.

The Golden Rule: the one who has the gold makes the rules.
And the IRS makes these rules. If you "give" your son the money, whether it's cash or a payment towards the purchase of a home, it's a gift as far as the IRS is concerned. Period, no exceptions. It will also matter to a mortgage holder, if there's going to be one, as they have to know the source of all funds being used to purchase the property.

I've dealt with this directly, with several offspring that we want to provide a substantial sum to them upon their first home purchase. There are any number of ways around this, but they all involve a consultation with a tax preparer/attorney who is familiar with local and Federal tax law.

I'm not a tax preparer or attorney, but based on my experience in this area so far, we're limited to (I believe) $18,000/year as an outright gift to a child in order to not ding them or ourselves with IRS issues. We write checks to our children every year for the maximum gift amount and put them in a drawer. When the times comes we'll have proof of our gifts (they don't have to accept them or take possession) so that when the time for them to buy a house comes around we'll have a pretty substantial amount set aside for them that we can give them "freely" and not have to worry about tax implications.

I like the idea of you buying the property and then "gifting" it to them, that might be easier from a tax standpoint. That, or if they can qualify for a mortgage on their income, let them buy it, then pay off the mortgage, or make a substantial contribution to the mortgage balance and have them get the lender to rebalance if they will to possibly get a lower payment.

Another approach might be for you to purchase the property and let them "earn" equity over time. After a pre-determined period of time elapses, the house becomes theirs. I had a friend in high school who was raised by an aunt and uncle as their parent had passed. The uncle's attorney set something up stating that my friend earned equity over time on the uncle's home, so that when the uncle and aunt went into assisted living the house transferred to her free and clear.

Regardless, you need to consult a tax or financial planner. You can't just give money away lump-sum without tax implications, and often pretty severe ones.

RM
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Old 04-15-2024, 10:02 AM
 
10,704 posts, read 5,651,721 times
Reputation: 10844
Quote:
Originally Posted by MortonR View Post
And the IRS makes these rules. If you "give" your son the money, whether it's cash or a payment towards the purchase of a home, it's a gift as far as the IRS is concerned. Period, no exceptions. It will also matter to a mortgage holder, if there's going to be one, as they have to know the source of all funds being used to purchase the property.

I've dealt with this directly, with several offspring that we want to provide a substantial sum to them upon their first home purchase. There are any number of ways around this, but they all involve a consultation with a tax preparer/attorney who is familiar with local and Federal tax law.

I'm not a tax preparer or attorney, but based on my experience in this area so far, we're limited to (I believe) $18,000/year as an outright gift to a child in order to not ding them or ourselves with IRS issues. We write checks to our children every year for the maximum gift amount and put them in a drawer. When the times comes we'll have proof of our gifts (they don't have to accept them or take possession) so that when the time for them to buy a house comes around we'll have a pretty substantial amount set aside for them that we can give them "freely" and not have to worry about tax implications.

I like the idea of you buying the property and then "gifting" it to them, that might be easier from a tax standpoint. That, or if they can qualify for a mortgage on their income, let them buy it, then pay off the mortgage, or make a substantial contribution to the mortgage balance and have them get the lender to rebalance if they will to possibly get a lower payment.

Another approach might be for you to purchase the property and let them "earn" equity over time. After a pre-determined period of time elapses, the house becomes theirs. I had a friend in high school who was raised by an aunt and uncle as their parent had passed. The uncle's attorney set something up stating that my friend earned equity over time on the uncle's home, so that when the uncle and aunt went into assisted living the house transferred to her free and clear.

Regardless, you need to consult a tax or financial planner. You can't just give money away lump-sum without tax implications, and often pretty severe ones.

RM
As clever as you think that is, it won't pass muster. Do a Google search on "completed gift" for more information.
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Old 04-15-2024, 11:45 AM
 
Location: Florida & Arizona
5,975 posts, read 7,365,693 times
Reputation: 7591
Quote:
Originally Posted by TaxPhd View Post
As clever as you think that is, it won't pass muster. Do a Google search on "completed gift" for more information.
True. I went back and checked my records. "Put them in a drawer" is what I figured our accountant does with them, as a flippant comment along these lines was made about this some years ago when we started doing it, but apparently they deposit the funds in their trust accounts. I just sign the checks, I don't do anything with them myself, I just hand them back to our accountant. Heck, I don't even look that closely at their trust accounts, as I don't manage them. I just make sure the bottom line goes up every year when I see the reconciliation.

These are details I leave to professionals, as the OP should as well. I don't ask for advice like this on the Internet because it's pretty much worthless unless you're dealing directly with a trusted professional. This is a perfect example.

RM
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Old 04-15-2024, 04:39 PM
 
8,575 posts, read 12,395,872 times
Reputation: 16522
Quote:
Originally Posted by MortonR View Post
I'm not a tax preparer or attorney, but based on my experience in this area so far, we're limited to (I believe) $18,000/year as an outright gift to a child in order to not ding them or ourselves with IRS issues. We write checks to our children every year for the maximum gift amount and put them in a drawer. When the times comes we'll have proof of our gifts (they don't have to accept them or take possession) so that when the time for them to buy a house comes around we'll have a pretty substantial amount set aside for them that we can give them "freely" and not have to worry about tax implications.
I'm glad to see that you've already corrected that statement. Putting a check in a drawer would not count as a gift.

Quote:
Originally Posted by MortonR View Post
I like the idea of you buying the property and then "gifting" it to them, that might be easier from a tax standpoint.
Cash is always the simplest way to make a gift.
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Old 04-15-2024, 06:06 PM
 
Location: 89052 & 75206
8,144 posts, read 8,338,067 times
Reputation: 20063
Quote:
Originally Posted by MortonR View Post
And the IRS makes these rules. If you "give" your son the money, whether it's cash or a payment towards the purchase of a home, it's a gift as far as the IRS is concerned. Period, no exceptions. It will also matter to a mortgage holder, if there's going to be one, as they have to know the source of all funds being used to purchase the property.

I've dealt with this directly, with several offspring that we want to provide a substantial sum to them upon their first home purchase. There are any number of ways around this, but they all involve a consultation with a tax preparer/attorney who is familiar with local and Federal tax law.

I'm not a tax preparer or attorney, but based on my experience in this area so far, we're limited to (I believe) $18,000/year as an outright gift to a child in order to not ding them or ourselves with IRS issues. We write checks to our children every year for the maximum gift amount and put them in a drawer. When the times comes we'll have proof of our gifts (they don't have to accept them or take possession) so that when the time for them to buy a house comes around we'll have a pretty substantial amount set aside for them that we can give them "freely" and not have to worry about tax implications.

I like the idea of you buying the property and then "gifting" it to them, that might be easier from a tax standpoint. That, or if they can qualify for a mortgage on their income, let them buy it, then pay off the mortgage, or make a substantial contribution to the mortgage balance and have them get the lender to rebalance if they will to possibly get a lower payment.

Another approach might be for you to purchase the property and let them "earn" equity over time. After a pre-determined period of time elapses, the house becomes theirs. I had a friend in high school who was raised by an aunt and uncle as their parent had passed. The uncle's attorney set something up stating that my friend earned equity over time on the uncle's home, so that when the uncle and aunt went into assisted living the house transferred to her free and clear.

Regardless, you need to consult a tax or financial planner. You can't just give money away lump-sum without tax implications, and often pretty severe ones.

RM
You don’t understand the tax code. I do.
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