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Started By
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Mortgage payments
Posted on 4/16/20 at 10:29 pm
Posted on 4/16/20 at 10:29 pm
2.8%
This post was edited on 3/25/21 at 11:17 am
23
Posted on 4/16/20 at 10:35 pm to UFownstSECsince1950
quote:
help your kid become a homeowner, and assist them getting started.
Is this after paying for college, buying them a car and paying for a wedding? I mean, how much are you looking to spoil your kid? Seems excessive to me.
Posted on 4/16/20 at 10:36 pm to UFownstSECsince1950
quote:
Let’s say you want to help your kid become a homeowner, and assist them getting started. You can co-sign on the mortgage as a non-occupant co-signer in order to get the loan, but what if you want to pay for the down payment as well on their first house (roughly a $30,000 down payment), what’s the best option?
I don’t know if I have the right answer here or not but my parents gave my wife and I $25k for our first houses down payment. My parents didn’t co-sign the loan so it might be different since you’re co-signing. We had to find a bank that was willing to accept “gift funds” for the down payment. We used a local bank that I had a relationship with, so it wasn’t a big deal, but that might be a potential hurdle.
Another consideration is the “gift funds” aspect. Bank made my parents sign a document that the money was a gift and not expected to be paid back to them in any way. It didn’t matter for us because we were married and $25k is under the IRS gift threshold. But if your child is single, you should consider the tax ramifications of gifting them $30,000 - you’ll have to pay gift taxes over whatever the current limit is.
That’s all I got. I’m not an expert, just from my experience
Posted on 4/16/20 at 10:36 pm to Paul Allen
quote:
Seems excessive to me.
Great contribution to his question.
Posted on 4/16/20 at 10:37 pm to UFownstSECsince1950
Bank will ask for them to produce a letter from you stating that the $30k was a gift and not a loan that they are having to repay.
Posted on 4/16/20 at 10:39 pm to Ice Cream Sammich
Thanks. It calls into question what is considered to be the thin line between assisting and enabling.
Posted on 4/16/20 at 10:42 pm to Paul Allen
quote:
Thanks. It calls into question what is considered to be the thin line between assisting and enabling.
you don’t know anything about OP, their child, or their relationship and life circumstances. Even if the line between assisting and enabling was at all relevant to this thread, you wouldn’t have any ability to make that assessment. Posted on 4/16/20 at 11:36 pm to Paul Allen
You sound jealous.
Posted on 4/16/20 at 11:54 pm to Tigerfan56
quote:
But if your child is single, you should consider the tax ramifications of gifting them $30,000 - you’ll have to pay gift taxes over whatever the current limit is.
What if you trickle the payments in lower amounts?
Posted on 4/17/20 at 2:46 am to UFownstSECsince1950
Good on you. I plan to buy my daughter’s first house. frick anyone banging on you for doing that for your kid.
This post was edited on 4/17/20 at 2:46 am
Posted on 4/17/20 at 3:51 am to UFownstSECsince1950
I would carefully consider the co-signing of the loan. There are a lot of risks that can ruin your credit and relationship with your child.
Posted on 4/17/20 at 5:25 am to touchdownjeebus
quote:
Good on you
What does this mean? Such a geigh phrase
Posted on 4/17/20 at 5:32 am to UFownstSECsince1950
My in-laws gave us $20k to buy our first house. No issues at all
Posted on 4/17/20 at 6:12 am to UFownstSECsince1950
That is a kind thing to do.
If he’s married, you and your wife can each gift him around 15k as a gift and not pay gift tax.
Also if he is married, you each could gift her the same amount.
If he’s married, you and your wife can each gift him around 15k as a gift and not pay gift tax.
Also if he is married, you each could gift her the same amount.
Posted on 4/17/20 at 6:13 am to UFownstSECsince1950
2 separate scenarios here.
1. If you are a non occupant coborrower, on the loan, you are literally on the loan. No gift needed. Your assets can be used in the transaction just as if you were a borrower, well because you are.
2. Both Fannie and Freddie accept gift funds as a down payment from a family member or a person with a “documented relationship” to the borrower. You will need to sign a gift letter stating it is not a loan. Gift finds can also be used on FHA loans, although that documentation of the funds has a couple other small requirements.
1. If you are a non occupant coborrower, on the loan, you are literally on the loan. No gift needed. Your assets can be used in the transaction just as if you were a borrower, well because you are.
2. Both Fannie and Freddie accept gift funds as a down payment from a family member or a person with a “documented relationship” to the borrower. You will need to sign a gift letter stating it is not a loan. Gift finds can also be used on FHA loans, although that documentation of the funds has a couple other small requirements.
Posted on 4/17/20 at 6:32 am to UFownstSECsince1950
Currently, you and your spouse can make unlimited annual gifts of up to $15,000 each ($30k combined) per recipient without tax consequences.
Any gifted amount to a person that is above the annual limit must be reported to the IRS and will count towards your lifetime gift tax exemption. The exemption is currently about $11 million per person.
Therefore, if you are married, you and your spouse together could gift your child up to $30,000 per year ($15k each) without any tax due by either party.
If you are not married, you could gift $15,000 to your child and another $15k to their spouse (if applicable) without any tax consequences.
If you are not married and your child is not married, you could then gift $15,000 now and another $15k in January 2021 and not have tax consequences. However, if you gift $30,000 now, you will have to report $15k of that to the IRS and your remaining lifetime exemption gets reduced by that amount.
Hope this helps.
ETA: what makersmark said. I didn’t see his until after I posted.
Any gifted amount to a person that is above the annual limit must be reported to the IRS and will count towards your lifetime gift tax exemption. The exemption is currently about $11 million per person.
Therefore, if you are married, you and your spouse together could gift your child up to $30,000 per year ($15k each) without any tax due by either party.
If you are not married, you could gift $15,000 to your child and another $15k to their spouse (if applicable) without any tax consequences.
If you are not married and your child is not married, you could then gift $15,000 now and another $15k in January 2021 and not have tax consequences. However, if you gift $30,000 now, you will have to report $15k of that to the IRS and your remaining lifetime exemption gets reduced by that amount.
Hope this helps.
ETA: what makersmark said. I didn’t see his until after I posted.
This post was edited on 4/17/20 at 6:34 am
Posted on 4/17/20 at 6:54 am to UFownstSECsince1950
It's called a gift. The mortgage company will let you know what documentation they need. You'll have to document that you have the money in an account and do a gift letter.
Posted on 4/17/20 at 7:33 am to Tigerfan56
quote:
Another consideration is the “gift funds” aspect. Bank made my parents sign a document that the money was a gift and not expected to be paid back to them in any way. It didn’t matter for us because we were married and $25k is under the IRS gift threshold
this is what my dad did for me as well, back in 1993 though so the rules may have changed. we just had to confirm to the lender that we were not required to pay it back, via a source of funds declaration
Posted on 4/17/20 at 7:53 am to Tigerfan56
quote:
But if your child is single, you should consider the tax ramifications of gifting them $30,000 - you’ll have to pay gift taxes over whatever the current limit is.
Your parents are worth more than $23 million?
Cuz they only need to worry about the gift tax if they are worth that much. And if they are worth that much, there are much easier ways to funnel the money for the children, e.g., do nothing jobs.
Posted on 4/17/20 at 7:58 am to MMauler
quote:
Cuz they only need to worry about the gift tax if they are worth that much. And if they are worth that much, there are much easier ways to funnel the money for the children, e.g., do nothing jobs.
The gift tax applies to anyone gifting over $15,000 to any one individual within a tax year. It doesn’t matter if your net worth is $100,000; if you give someone a $20,000 gift you have to pay taxes on $5,000 of it
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