<< General Disclaimer: > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It cannot be used by any taxpayer for the purpose of > << avoiding penalties that may be imposed on the taxpayer. > << ================================================== ===== >
Thomas Healy wrote:
- quote -

As this is for a short temporary period, why not a personal
loan at the federal short term interest rate? The child
could then gift the interest payment which would be less
than the annual $11,000 gift tax exclusion. The mother
could then arrange for the mortgage which would be
acquisition debt.

--
Alan
http://taxtopics.net

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"jm" <newsjohnny[at]comcast.net> wrote:

- quote -

I would suggest you not mess with the gift approach.
Sometime in the next however many decades your total assets
may well increase above the estate tax limit, or you may
have greater needs for making taxable gifts (limited to
$1,000,000 over your lifetime).

Given the circumstances, you could have Mom sign a deed of
trust and record the security for the loan with the county
clerk. If she uses the funds traceably to buy her new home,
it is acquisition debt. Any interest she pays would be
deductible as home mortgage interest. And when she pays you
off, the new mortgage or HELOC balance would also be
acquisition debt, which is much more favorable than equity
debt as far as deductibility for AMT and limits.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << Copyright (2005) - All rights reserved > << ------------------------------------------------->

I want to minimize the tax impact, for both of us, of giving
my Mother some temporary cash to help buy her new house.

Due to the lousy local housing market her currently listed
home isn't selling as quickly as expected. Her new house is
almost finished and they buyer want to finish up and get
paid. I will need to give my mother about $60,000
temporarily so that she can buy the new home. Then she
plans on getting a HEL/Mortgage to pay me back and restore
her savings.

Is the best option a Gift or a Loan or Is there some other
option?

With the gift option, I believe we can use our lifetime gift
deduction to eliminate any tax payout.

For tax purposes, do the loan have to be close to current
market rates or can it be for zero finance charges?

I know there are other options out there (eg. bridge loan),
but I'm also trying to avoid any finance charges on her or
myself.

Thanks.

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