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My sister and I are going to move in together. She does not

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My sister and I are...
My sister and I are going to move in together. She does not have any credit - and therefore cannot co-sign on the mortgage with me. She does have an income and savings and would want to help with the down payment costs. Could she make an investment in the property since she's going to be living there (and will be on the title) and not have the same tax implications as if it were a gift? Thanks.
Submitted: 2 years ago.Category: Tax
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5/9/2015
Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,890
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello,Yes your sister could invest and be a part owner and that would not be a gift to you.As long as she is on the title to the home would be long to her as well. If sold she would be allowed the same exclusion of gain as you would. She could not claim the interest on the loan as a deduction though. This is because she is not liable for the loan repayment.If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed), if you need more information reply below.
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Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
Please let me know if you need more information. I want to make certain you understand your situation.
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Customer reply replied 2 years ago
Thank you for your quick reply. Just to make sure I fully understand, she could invest any amount and would not get hit with a gift tax?
Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
That is correct. She is not giving you money, she is buying her half of the property. That is not a gift but a purchase.
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Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return.
The tax applies whether the donor intends the transfer to be a gift or not.
The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return.
If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.
Your sister is not making a gift because she is receiving ownership in the property too.
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Robin D.
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