Family loan to pay downpayment

[Anonymous]

My parents are going to loan me some money for my downpayment while I sell my current place. The plan is to pay them back as soon as I get the funds from the sell. The amount of money they are going to lend me is above the yearly maximum gift allowance before it causes gift taxes. I just need to money for a couple of months while the sell of my place goes through, so i'll pay back before the end of the year. My question is: would that still trigger the gift tax even if I pay it back before the year ends? What if they write the check directly to the settlement escrow? any advice would be appreciate it.

[Anonymous]

if you are in the USA, it won't trigger a gift tax if you document a loan and pay some interest. look at www.zimplemoney.com for reference documents

[Anonymous]

If you pay it back in the same year it won't trigger the gift tax. We did the same thing last year.

[Anonymous]

Real Estate lawyer here. Both of the PPs are sorta right. As in technically they are both wrong, but practically they may be right some of the time.

This is really a time when you need to hire a lawyer to do it right.

[Anonymous]

This is tricky, as you may need to document it as a loan to avoid gift tax, but if you do, it may make getting a mortgage more difficult.

[Anonymous]

You get what you pay for when you ask for free legal/medical advice on the Net.

[Anonymous]

Do you have a DH? I ask because the gift tax can be given 4 ways then (your mom to you, your dad to you, your mom to your DH, your dad to your DH). Is it still not enough if you do it that way?

[Anonymous]

And... They can gift it to your kids as well. Also another alternative that won't trigger the mortgage warning flags for another loan is to take a loan from you/your spouse retirement account (Fed TSP / 401k / 403b / pension whichever applies). That is typically viewed as borrowing money from yourself, not a third party.