Finance

Have Finance Questions? Ask a Financial Expert Online.

Ask an Expert,
Get an Answer ASAP!

Finance

We loaned our Daughter $40,000 for a down payment on a house…

Customer Question
We loaned our Daughter...

We loaned our Daughter $40,000 for a down payment on a house she is purchasing. She has excellent credit and qualified for a home 300,000 more than the one she is purchasing but she just did not have the down payment. Now we have received a form from the lender asking us to sign that we gifted her the money. We are concerned that she will have to pay taxes on the amount of the gift---even though it is a private loan. What is the best course of action at this time? Thank you.

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

We wrote her 4 checks at $10,000 each and all signed my my husband. The account, however, is in both of our names. I don't know if that info matters.

Submitted: 6 months ago.Category: Finance
Show More
Show Less
Ask Your Own Finance Question
Answered in 9 minutes by:
7/28/2017
Financial Professional: emc011075, Tax adviser replied 6 months ago
emc011075
emc011075, Tax adviser
Category: Finance
Satisfied Customers: 3,388
Experience: IRS licensed Enrolled Agent and tax instructor
Verified

Hi. My name is ***** ***** I will be happy to help you.

Gift and loan are two different things. A loan has to be repaid, usually with an interest, a gift is not. First talk to the lender if you can make a loan, not a gift. If he does not agree you will have to sign the documents. Receiver of a gift is not required to report the gift of pay any taxes. However, the donor(s) is required to file a gift tax return if the amount is over 14K. Each of you can gift your daughter 14K without having to file a gift tax return. If your daughter has a spouse you can each gift additional 14K to her spouse, which would eliminate the gift tax return requirement (14x4=56).

Ask Your Own Finance Question
Customer reply replied 6 months ago
I already knew everything you told me. My question is why does the lender care if we loaned or gifted the money to our Daughter? It does not involve them----or does it? Is there some law that she cannot use the money for a down payment if it is a loan and not a gift? What if I opened an account in both my and my Daughter's names and put money in it. Could she withdraw the money that way? I don't want to fill out a form saying it is a gift when it is not.
Financial Professional: emc011075, Tax adviser replied 6 months ago

The lender does not want that your daughter has additional financial obligation because it lowers her disposable income and increases risk of default. The lender wants to make sure that she can pay of the loan on monthly basis. A 40K loan is like having 40K car loan or 40K student loan. You can open a joint account, deposit the funds and let her use it for the down payment, but if she is still expected to pay it back it is still a loan. If she does not disclose it as a loan and the financial institution finds out, they can cancel the loan and it will be much more difficult for her to work with them.

Ask Your Own Finance Question
Customer reply replied 6 months ago
I am not happy with this process or your answer. It never answered my question. Please refund my money and cancel this immediately---very poor service!
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 13,520
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name's Lane. I am a different expert. I have a different answer.

...

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice on three continents since 1986.

...

Bear with me a moment and I’ll provide my initial response, and then we can go from there if you have further questions on this

Ask Your Own Finance Question
Customer reply replied 6 months ago
I am cancelling as service is very poor.
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago

The lender is trying to document that this is a gift of equity, rather than a loan.

...

And this IS the right way to document this. If you loaned your daughter the funds, it means that there is debt owed to the lender AND debt owed to you.

...

There is NO gift tax implication here (gift taxes are paid by the giver AND are only due after the giver has given away more than that lifetime exemption of $5,490,000 - twice that for a married couple).

...

However, if the downpayment was borrowed and the rest of the funds are borrowed, they may not underwrite the loan

Ask Your Own Finance Question
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago

This is VERY much their business... Mortgage underwriters have the right to know the source of funds ... and if your daughter had to BORROW money for the downpayment and will owe them money as well, then they, again, may very well not underwrite the loan.

...

So sorry to be the messenger here, but this is what it is

...

I home you'll rate me on thoroughness and accuracy, rather than any good news/bad news content

Ask Your Own Finance Question
Was this answer helpful?
Ask Rakhi Vasavada Your Own Question
Rakhi Vasavada
Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2,608
2,608 Satisfied Customers
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Rakhi Vasavada is online now

A new question is answered every 9 seconds

How JustAnswer works:

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

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.WMatteson, 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.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, 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.

OrvilleHesperia, 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!!!!

AlexLos 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.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Rakhi Vasavada

Rakhi Vasavada

Financial and Legal Consultant

2,608 satisfied customers

Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Megan C

Megan C

Certified Public Accountant (CPA)

2,218 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

1,920 satisfied customers

More than 5000 online tutoring sessions.

JKCPA

JKCPA

CPA

844 satisfied customers

Bachelors degree and CPA with Accounting experience.

Eric

Eric

Financial Manager

559 satisfied customers

Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.

R. Klein, EA

R. Klein, EA

Accountant

480 satisfied customers

TurboTax Expert. QuickBooks Certified Pro Advisor

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

332 satisfied customers

NASD Licensed Rep, 1997-2001, Business Attorney

< Previous | Next >

Related Finance Questions
Have two options to start with a 401k. It allows me to setup
Have two options to start with a 401k. It allows me to setup a "roth" option or just a regular 401k. Do I want to elect the ROTH ? Why or why not ?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,353 satisfied customers
My question is if our bookkeeper messed up our books and we
Hello - my question is if our bookkeeper messed up our books and we are starting from scratch for 2018. When I carry 2017 ending balances over to our 2018 books do I put the balances in the equity acc… read more
Kelly McGlynn
Kelly McGlynn
Bachelors of Science
2 satisfied customers
I am looking for a succinct informational guide for
Hello, I am looking for a succinct informational guide for pass-though entities as effected by the Tax Cut and Jobs Act. If possible? Thanks… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,098 satisfied customers
Can someone claim the American Opportunity Credit for
can someone claim the American Opportunity Credit for previous years amending the previous returns or only for the current year?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,098 satisfied customers
Do I Qualify for a solo 401k plan? 1) I do make
Do I Qualify for a solo 401k plan?1) I do make self-employment income. (LLC s-corp - 100k+/year)2) I have 2 w-2 employee's.Myself and my girlfriend.My girlfriend works 30-hours per week.I "think" 30-h… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,353 satisfied customers
I just switched from sole proprietor to S Corp. Now I need
Hi. I just switched from sole proprietor to S Corp. Now I need to fill out OIC 433a form. Should I use sole proprietor information of S corp information to fil it out? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,353 satisfied customers
My dad passed last June. He gave everything away, including
My dad passed last June. He gave everything away, including the house and it's contents ( quick title claim) and vehicles before he did. Am I responsible to pay his taxes. … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,353 satisfied customers
I need to speak with an accountant. I have an new s-corp and
I need to speak with an accountant. I have an new s-corp and have several questions. I would like to speak to someone over the phone not type.… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,098 satisfied customers
How do I figure my basis upon selling stock in a MLP? Do I
How do I figure my basis upon selling stock in a MLP? Do I use my original cost of the shares or the K-1 Capital Account ending balance? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,284 satisfied customers
For our corporate tax return, can we fully depreciate the
Hello, For our corporate tax return, can we fully depreciate the value of new truck we purchased in 2017? We are a corporation and the truck is for pick up and deliveries of inventory and other work r… read more
Carter McBride
Carter McBride
LLM
473 satisfied customers
I normally don't have to do taxes because I only get Social
Hello, I normally don't have to do taxes because I only get Social Security disability. But in late August I sold a home in an East Coast day and bought one in a West Coast state and also have about s… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,098 satisfied customers
I recently discovered that the AFLAC deductions coming out
Hi Pearl. I recently discovered that the AFLAC deductions coming out of our employee's payroll checks have been treated as post-tax deductions instead of pre-tax deductions. This has been happening si… read more
taxmanrog
taxmanrog
Master\u0027s Degree
819 satisfied customers
Became unemployed in 2017, lost insurance so signed up for
Became unemployed in 2017, lost insurance so signed up for the ACA. Became employed during the same year but not eligible for insurance till late in year. Once I was eligible for employer insurance en… read more
Carter McBride
Carter McBride
LLM
473 satisfied customers
I am 64, currently retired, collecting social security and
I am 64, currently retired, collecting social security and drawing a minimum from from my retirement IRA fund. Because of my income status, I also qualified for assistance through the ACA." I have bee… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
I would like to know, if I am planning on buying a stock and
Good Afternoon,I would like to know, if I am planning on buying a stock and turning around and taking the profit from it in less than a year, should I purchase it in my self directed 401k or should I … read more
Carter McBride
Carter McBride
LLM
473 satisfied customers
AirBB host profit determination after discount; How can i
AirBB host profit determination after discount; How can i tell what my profit will be after i apparantly created a discount? I don't see the calculation. One of my applicants has stated that changing … read more
Emilee Weaver
Emilee Weaver
Controller
Masters of Professional Accounting
88 satisfied customers
I have an employee (she is salaried full time) who wants me
I have an employee (she is salaried full time) who wants me to issue her bonus check using her company tax ID (a company she still owns even though she works for us full time) so she can pay the taxes… read more
Carter McBride
Carter McBride
LLM
473 satisfied customers
I want to establish business as a foreign tax exempt
I want to establish business as a foreign tax exempt corporation in New York State, what tax forms are needed by the department of state?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,353 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x