I was wondering what the difference would be on gifting money for a down payment versus. having it be considered an investment?

UPDATED: Mar 26, 2012

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I was wondering what the difference would be on gifting money for a down payment versus. having it be considered an investment?

I am working to purchase a condo but my mother will be assisting me with the down payment and closing cost portion of it which will end up totaling about $40K. I have researched online and found that she is only able to gift up to $13K per year without having to pay taxes to the IRS on it. Is she able to pay the entire down payment herself and have it considered an “investment” if my lender says that they do not report the funds as “gift funds”? Or, will I need to get 3 different people to gift me the $13K each which will total about the $40K that I will need?

Asked on March 26, 2012 under Real Estate Law, Virginia


Darren Delafield

Answered 10 years ago | Contributor


This is a mixed accounting and legal question. You should seek the aid of a CPA. Having said that, it is true that there is a 13K  limit on gifts which can be made free of the inheritance tax. You have not stated that there will be an inheritance tax. The inheritance tax, if any, will depend upon the size of mother's estate. If she gives you more than 13K, you will be required to file tax forms, but you may not be required to pay a gift tax. Talk to your accountant. It is also true that the 13K limit is per person. Who are the other individuals who will be making gifts? Are you going to be the sole owner or is there another owner who could be the recipient of a gift? You did not mention either a father or a husband, so I am guessing about the other potential parties.


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