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Bank of america wanted me to gift my daughter money so she

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could qualify for a 20%...
Bank of america wanted me to gift my daughter money so she could qualify for a 20% down loan she really "borrowed" it. We have a loan document and are filing a lien against the home. She is paying interest and we are claiming the interest on our taxes. Could we get into any trouble.
Submitted: 8 years ago.Category: Tax
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Answered in 4 minutes by:
11/3/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hello jk,

Even if you help your daughter to purchase her first home by giving her money as a gift or as a loan, either one does not disqualify her from being eligible for the credit.

You could not simply purchase the home for her and give her the home as a gift, and have her still qualify. She actually has to be the one to purchase the home. But if you give her part of the money as a gift or a loan or if you co-sign the loan on the home, this does not disqualify her from claiming the credit if she is otherwise eligible for it.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you jk

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Customer reply replied 8 years ago

I AM SORRY I KNOW ABOUT THE TAX CREDIT I JUST WONDERED WHEN YOU SIGN A GIFT LETTER FOR A BANK AND THEN IT BECOMES A LOAN CAN THE FEDERAL GOVERNMENT HOLD YOU TO THE FACT YOU SAID IT WAS A GIFT EVEN IF YOU SHOW THERE IS REPAYMENT

Tax Professional: Merlo, Accountant replied 8 years ago
Hello again jk,

Sorry for the delay in responding, but I had already left the forum last night by the time you posted this follow up question.

The gift letter that you sign for the bank is not reported to the IRS. It is strictly used by the bank for their own internal purposes. So if you have now reclassified this as a loan to your daughter, the IRS will not have issues with this, as long as you are reporting the interest that she is paying you as income, which you indicated that you were doing this. The IRS cannot hold you to the fact that you said this was a gift. This is a personal matter between you and your daughter and a financial matter between you and the bank, but the IRS will not get involved and does not care how this money is classified.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you jk.



Merlo
Merlo, Accountant
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