Gift Funds, Gift of Equity
I have been considering a gift of equity for my daughter, but do not know what steps to follow. I am also not aware of any extra costs to me. What is your general advice?
March 29, 2004
A gift of your equity in a property can be in any amount that is supported by the appraised value. You enter into a sale contract, and the lender involved will require that you complete a gift affidavit explaining the extent of your gift and certifying that repayment is not required. Your daughter will then be given credit for that amount as a down payment in the transaction.
If the gift exceeds the annual amount you are allowed to give under current IRS rules (I believe it is $11,000), your accountant will undoubtedly recommend that you file a Gift Tax Return, but no federal tax will be assessed until your estate is handled, and it will depend on the situation you leave at that time.
Copyright 2004 #207
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