Santa Rosa, CA · Member since 2012 · 7 posts · 0 votes
My wife and I are buying a SFH investment property with my father in law. He will be the mortgage holder and we will put up the downpayment. A mortgage broker tells me the downpayment must appear to come from my father in law, the mortgage holder.
Here's the question: How does he avoid capital gains tax on the downpayment we give to him? The "gifting" limit is 13K per year.
Perhaps if we transfer title to all three of us with a warranty deed after the close, we can deny it was a gift if the IRS asks???
Why is there a down payment requirement if your FIL is funding the deal? He can simply make a larger loan for the purchase, are you getting any conventional or other financing withh the MB?
Our group of three gest a better rate on the mortgage with a 25% downpayment. The FIL is willing to carry the mortgage up to a certain amount, the downpayment will bring us up to our shopping budget. FIL does not have cash for the deal, but is willing to pay the mortgage principal.
To clarify, the father in law will be the mortgagor/borrower. I'm learning. Been a business man for three decades, homeowner for a 15 years, but the wife and I are new to investment real estate.
How is the business end of your deal structured? If you are all participating in the investment/business activity, it might not be a gift, it might just be part of your investment in the deal. Not enough information has been given to say....