QUESTION
Can we avoid taxes if my dad is buying me a house with my money? How?
Asked on Apr 23rd, 2015 on Taxation - Michigan
More details to this question:
My dad is buying a house for me with my money. How can we do this without the money being taxed as income for him? I know I can give him and my mom $13,000 each, but I need to give them $45,000. I don't want to pay taxes on the remaining money since it really isn't "income" for him. Can we use a partnership agreement? How does this work? Can I just pay the down payment directly, or does it have to come from him? Once we've bought the house, I'll just pay the mortgage directly, and eventually we can transfer the title. Thank you so much for any help you can offer with this!
3 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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What exactly is the point of giving the money to your father for him to make your down payment? You can avoid any tax implications by simply making the down payment yourself. However, since there is actually no gift for your father here (he's does get to keep your money, when he gets it he's obligated to make the down payment). There is no gift tax. Just document the flow of cash in case the IRS ever looks at it. On the other hand, this has the smell of being money laundering. If it's illegally obtained money, don't get your father involved. It's a crime even if he doesn't understand what you're doing.
Answered on Apr 24th, 2015 at 1:49 AM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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Why is he buying it instead of you buying it? Why would the money be income to him? If you give him $45K, you must file a gift tax return (though no tax will be due), but he won't need to report any income. You'd better had a damn good WRITTEN agreement with him to show the IRS or other authorities should that become necessary.
Answered on Apr 23rd, 2015 at 7:50 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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I do not understand exactly what you are attempting to do, why can't you but the house.
Answered on Apr 23rd, 2015 at 7:06 PM