Consider Giving The Gift of Magnolia TX Real Estate
The gift-giving season is in full swing and some parents are considering a sizable and meaningful present for their children and/or grandchildren – Magnolia TX real estate. This is the sign of a solid trend, since a growing number of parents are currently helping their children purchase homes, whether they’re buying these homes for their sons and daughters outright, helping them pay for closing costs, or coming up with the money for their down payments.
While such a gift is certainly in keeping with the spirit of the season, those who are giving or those relying on monetary donations from their parents or family members to buy Magnolia TX real estate should follow some fairly simple underwriting and IRS rules.
- First, parents need to know that they can gift a total of $13,000 a person without being taxed on that money. In other words, a father can provide $13,000 to his son and another $13,000 to his daughter-in-law that the couple can use for a down payment. At the same time, the mother can provide the same amounts to her son and daughter-in-law without having to pay taxes. Click here for detailed information about annual gift tax exclusions. (Note: unless Congress acts soon, that amount may well be sharply reduced in 2013.)
- The person giving the gift must file a form 709 (gift tax return) for any gifts over $13,000 per year per recipient.
- Buyers applying for a conventional mortgage loan must use their own funds for at least 5 percent of their down payment. They can then use gifted funds for the rest
- When buyers are providing a down payment of at least 20 percent of their home’s purchase price, they can rely on gift funds for the entire down payment. For FHA-backed mortgage loans, borrowers can pay for the entire down payment with gifted funds.
- Mortgage lenders will need to see documentation showing the origin of gifted funds.
- A gift of real property is accomplished through a deed. Depending upon your state rules, a warranty or grant deed is normally used, but in some cases a quitclaim deed may be appropriate. You will identify the property being transferred and sign, notarize, and register the deed as clear evidence that the property has been given to your children.
As with all major financial decisions, you would be wise to consult your accountant and/or tax attorney before gifting monetary assistance for the purchase of Magnolia TX real estate or the property itself.
Whether you are new to the Magnolia Texas real estate market, thinking of moving up, or you’re an experienced investor, Pam Sitterly has the expertise, proven track record, and resources to help you buy Magnolia TX real estate for sale or market Magnolia TX homes for sale. Enthusiasm, knowledge of the area and personal concern for her client’s interests combine to make Pam an outstanding resource for your real estate transactions.
Pam works extensively to help Buyers and Sellers meet their Magnolia Texas real estate goals. For more information about buying or selling your Magnolia TX home, please call Pam at 281-723-0324 or via email with this convenient contact form.