How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Stephen G. Your Own Question

Stephen G.
Stephen G., Sr Financial Expert
Category: Finance
Satisfied Customers: 4037
Experience:  Extensive Experience with Tax, Financial & Estate Issues
30050794
Type Your Finance Question Here...
Stephen G. is online now
A new question is answered every 9 seconds

We are purchasing a house/property from our son that we both

Resolved Question:

We are purchasing a house/property from our son that we both occupy. My son wants to purchase a business and move away and sell us the house. We are just financing the mortgaged value - just what the amount is. We are getting a gift of equity type of loan it covers down payment, all cost and prepaid escrow of $78,125. Do we have to claim the gift of equity of $78,125 as income for tax purposes in the state of New Mexico? Thank you very much.
Submitted: 10 months ago.
Category: Finance
Expert:  Stephen G. replied 10 months ago.

Stephen G. :

Hello, my name isXXXXX & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.

Stephen G. :

No. Gifts are not taxable for income tax purposes.

Stephen G. :

When you refer to a "gift of equity type of loan.......", exactly what do you mean? Loans aren't gifts?

Stephen G. :

Is your son loaning you the down payment, etc.?

Stephen G. :

In other words will you have to pay him back?

Stephen G. :

If so, you should sign a note for the amount credited & he should record a second mortgage for same in order to make any interest that you pay him deductible to you & taxable to him if that is your intention.

Customer:

We are not putting any money down on this loan. Our loan company calls it a gift of equity home purchase. Our son and us have equal share in the property the home. My husband and I pay 2/3 of the mortgage of the mortgage and my son pays 1/3 of the mortgage My husband and I built this home with the mortgage in my son's name only. A year later my son added on to the home we both pay our own share of the mortgage We borrowed a certain amount and he borrowed, we pay our own amount but the mortgage is in his name only he now wants to sell the whole place to us.

Stephen G. :

I understand, so it really isn't a "loan" of the down payment, etc. ie. you won't owe anything to your son after the transaction takes place; is that correct?

Stephen G. :

The only reason it is a "gift of equity" from your son to you is because you put the property in his name when it was originally purchased,

Stephen G. :

In reality, that's when an actual gift took place; but it was from you to your son; and every time you made a mortgage payment, you made an additional gift to him as the property is in his name alone.

Customer:

We both have lived in the home for 10 years and we both have made improvements. My husband and I don't want to put a down payment because we have put 10 years of equity into it. We will not owe anything to our son. Our son just wants us to take over the mortgage free and clear. Yes, on the gift of equity. We just want to know if we have to pay taxes on what the mortgage company calls gift of equity. We have a shared bank account he pays we he borrowed and we pay what we borrowed for the home.

Stephen G. :

No. There's no income or gift tax involved as far as you are concerned.

Stephen G. :

Your son would be responsible to file a gift tax return for the gift of equity to you, but no gift tax will be due.

Stephen G. :

What happened when you purchased the property? Who provided the downpayment? What was the reason that you put the property in your son's name?

Customer:

Thank you so much for your expertise. You answered my question in full. We both went 50/50 on the property. He give us cash and we rolled our half into the loan.

Stephen G. :

If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Thanks again for using us for your tax and financial questions. You may get a short survey from the site; if it isn't too much trouble I would appreciate it if you would answer it; the survey results are used to rate our performance;

Customer:

We will do that. Thank you so much.

Stephen G. :

You are welcome. Please remember to rate my response; it is the only way we get credit for our work.

Stephen G., Sr Financial Expert
Category: Finance
Satisfied Customers: 4037
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 3 other Finance Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
< Last | Next >
  • http://ww2.justanswer.com/uploads/RA/rakhi.v/2012-7-3_14374_RakhiVasavadaL.64x64.jpeg Rakhi Vasavada's Avatar

    Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    1890
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    1755
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg JKCPA's Avatar

    JKCPA

    CPA

    Satisfied Customers:

    838
    Bachelors degree and CPA with Accounting experience.
  • http://ww2.justanswer.com/uploads/starside8/2010-2-16_55433_DSCN1175.JPG Eric's Avatar

    Eric

    Financial Manager

    Satisfied Customers:

    558
    Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.
  • http://ww2.justanswer.com/uploads/FA/fastfile/2011-12-15_23139_Klein2011small.64x64.jpg R. Klein, EA's Avatar

    R. Klein, EA

    Accountant

    Satisfied Customers:

    397
    Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    324
    NASD Licensed Rep, 1997-2001, Business Attorney