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Down Payment question

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danlaxx1
Established Member

Down Payment question

Hi everyone,

 
I was hoping someone could help me out. My fiance and I are in the process of buying a home. We wanted to use money from a trust that she has for a down payment. The LO suggested that she gift me the money and we provide gift letters, bank statements showing the withdrawel/deposit, etc.
 
One of the things we plan on doing before we get married in June is to open up a joint bank account together. Thankfully, we have the opportunity to put down $100,000 on the house. We put down $25k when we signed the contract. The LO estimated that we're going to have to put down an addtional $97k at closing to cover the rest of our down payment, closing costs and all the prepaid items, blah blah blah...
 
Finally, here's my question... if she gifts "us" the money to our newly opened bank account, will we have to pay taxes on it? Additionally, if she just gifted me the money, will I have to pay taxes on it? The LO doesn't seem to think so because the money is for a house. I tried emailing my accountant but he seems to disappear as soon as the tax season is over. 
 
Her name isn't on the mortgage but it will be on the deed to the house, which is why we're in the situation.
 
Thanks in advance for all your help! 
 
Dan
Message 1 of 5
4 REPLIES 4
DallasLoanGuy
Super Contributor

Re: Down Payment question


@danlaxx1 wrote:

Hi everyone,

 
I was hoping someone could help me out. My fiance and I are in the process of buying a home. We wanted to use money from a trust that she has for a down payment. The LO suggested that she gift me the money and we provide gift letters, bank statements showing the withdrawel/deposit, etc.
 
One of the things we plan on doing before we get married in June is to open up a joint bank account together. Thankfully, we have the opportunity to put down $100,000 on the house. We put down $25k when we signed the contract. The LO estimated that we're going to have to put down an addtional $97k at closing to cover the rest of our down payment, closing costs and all the prepaid items, blah blah blah...
 
Finally, here's my question... if she gifts "us" the money to our newly opened bank account, will we have to pay taxes on it? Additionally, if she just gifted me the money, will I have to pay taxes on it? The LO doesn't seem to think so because the money is for a house. I tried emailing my accountant but he seems to disappear as soon as the tax season is over. 
 
Her name isn't on the mortgage but it will be on the deed to the house, which is why we're in the situation.
 
Thanks in advance for all your help! 
 
Dan

 

I am not a cpa..... 

 

The gift letter for the lender is technically different than the irs gift rules. imo

She is withdrawing money and putting it down on a house that she will live in(just moving it between financial instruments for convenience). She is not giving it to anyone. 

 

As for withdrawing from a trust and those tax implication, i dont know.

 

You should ask a cpa. 

 

/I am not a cpa

 

 

Retired Lender
Message 2 of 5
Anonymous
Not applicable

Re: Down Payment question

I'm not a cpa either, but I don't see the govt letting a guy pick up a cool 100k outta a trust and not pay taxes on it.

 

So what kind of house you looking to buy/loan product where they want 100k as a downpayment?

Message 3 of 5
danlaxx1
Established Member

Re: Down Payment question

Thank you both for your responses so far! 

 

We would much rather deposit the money into a joint bank account with both of our names on it, which is most likely what we are going to do, unless we have to pay taxes on it. IF there are any kind of tax implications because of the gift, our LO will find an alternative way where my fiance can get a certified check to provide at closing, without having to withdraw and deposit it into a different bank account.

 

We're the ones that want to put down 100k. We live on Long Island and would rather put more money down to lower our monthly payment. 

Message 4 of 5
psm
Contributor

Re: Down Payment question

It will really depend on the type of trust and if the disbursments are from principal or interest. The gifting it to you part may add a second layer of taxation unless you are married when the money is transferred to you. Definitely talk to a CPA. 

08-2022: EQ 830, TU 834, EX 832 - total credit limit 230,000+
Message 5 of 5
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