Gifting to son

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    Gifting to son

    Good morning Mark, et al:

    Parents want to gift their son a sum of money. The scenario is as follows:

    Son is selling his home and will be moving into his parents home. He wants to buy the parents home and expand to provide inlaw apartment for them. He will obtain a mortgage. The father will gift him the money to pay off the mortagage. Lets say the mortgage is $300,000. It is my undertanding there is a $13,000 exclusion allowable for each parent to gift each child. I assume this will require a gift tax on the remaining $274,000. Is that corrrect? If so, are there any other options available with this type of scenario to minimize or eliminate this taxable event? The taxpayer also mentioned that some of the mortgage companies noted  there are some Fannie Mae rules which disqualify an applicant for a mortgage for 5 years if gifting is involved?? (Ive never heard that). Thank you for your help.

     
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    Re: Gifting to son

    In response to JOSEPHTK's comment:

    Good morning Mark, et al:

    Parents want to gift their son a sum of money. The scenario is as follows:

    Son is selling his home and will be moving into his parents home. He wants to buy the parents home and expand to provide inlaw apartment for them. He will obtain a mortgage. The father will gift him the money to pay off the mortagage. Lets say the mortgage is $300,000. It is my undertanding there is a $13,000 exclusion allowable for each parent to gift each child. I assume this will require a gift tax on the remaining $274,000. Is that corrrect? If so, are there any other options available with this type of scenario to minimize or eliminate this taxable event? The taxpayer also mentioned that some of the mortgage companies noted  there are some Fannie Mae rules which disqualify an applicant for a mortgage for 5 years if gifting is involved?? (Ive never heard that). Thank you for your help.

    Dear JOSEPHTK:


    There are a lot of moving parts to this and several possible ways to work it out.  This is a situation where a directed plan tailored to the needs and inclinations of the parties should be "tailor made" for the parties, rather than a generalized discussion of the possiblilities stated.  You should consult with your tax advisor or, if you don't have one, work with one you're comfortable with.

    Mark H. Misselbeck, C.P.A., M.S.T., Tax Principal

    Katz, Nannis + Solomon, P.C.

     

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