December is gift giving season and some parents are considering a sizable and meaningful present for their children and/or grandchildren - Tampa FL 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 Tampa FL 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 Tampa FL real estate or the property itself.
When buying or selling property in today's real estate market, it's important to have confidence in your Tampa FL real estate professional! In order to be the best, I have earned the CRS (Certified Residential Specialist) and ABR (Accredited Buyer's Representative) designations. I have also been awarded a National Award of Excellency by Realtor.com. This demonstrates my desire to stay on the cutting edge of the Tampa Bay real estate market. My commitment as your Tampa area REALTOR® is to provide you with the customized real estate service you need!
I AM A SHORT SALE & FORECLOSURE SPECIALIST
As an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime! That's why my goal is to KEEP YOU INFORMED on trends in the Tampa FL real estate market using the latest sales statistics in Tampa. With prices and interest rates at historic lows, now is the right time to buy real estate in the Tampa market!
Let me know what you need and I will email you a list of properties INCLUDING BANK-OWNED, SHORT SALE & HUD PROPERTIES that suits your location and fits your budget. Please call, 813,728-3880, or email me at any time.