Taxable gift question - 10/15/23
I plan to talk to an accountant tomorrow but thought I would check here as well since some of you may know or have some suggestions about the best way to go about this.
We thought we were about to buy a for sale by owner home recently but the owner decided not to sell. We are now in negotiations with another couple who wish to sell their home as a for sale by owner. This couple has an assumable FHA mortgage with a balance of about $185,000 at 4% which is quite attractive. The mortgage lender that I had been planning to use said rates are at 7.375% on a 15 year fixed right now so getting 185k at 4% would really save us a bunch of interest.
We have quite a bit of cash to put down but not enough to fully fund the remainder of the purchase price. So somehow we need to come up with some more cash.
Yesterday my brother offered to loan us whatever amount extra was needed (unsolicited I might add). I had been thinking about cashing out a Roth IRA account to come up with the extra (I am 59 and think that I could do that without a penalty but need to confirm that) but when he offered I thought wow, ok and thanks brother.
In the middle of the night though I wondered if he could do that without any incurring any tax and if we could accept that money without having to pay tax. I looked up non taxable gift amount and it looks like for 2023 it is $17,000. If he gifted that amount to me and the same amount to my wife that would pretty much cover the extra that we need. I am still unsure if we would need to pay taxes on that gifted money. If we do, then this plan will not work.
We plan to pay him back if we do accept the money and then wonder if he would have to pay tax on that money.
Anyway, I would appreciate your thoughts if you know the real deal on this type of situation.
We thought we were about to buy a for sale by owner home recently but the owner decided not to sell. We are now in negotiations with another couple who wish to sell their home as a for sale by owner. This couple has an assumable FHA mortgage with a balance of about $185,000 at 4% which is quite attractive. The mortgage lender that I had been planning to use said rates are at 7.375% on a 15 year fixed right now so getting 185k at 4% would really save us a bunch of interest.
We have quite a bit of cash to put down but not enough to fully fund the remainder of the purchase price. So somehow we need to come up with some more cash.
Yesterday my brother offered to loan us whatever amount extra was needed (unsolicited I might add). I had been thinking about cashing out a Roth IRA account to come up with the extra (I am 59 and think that I could do that without a penalty but need to confirm that) but when he offered I thought wow, ok and thanks brother.
In the middle of the night though I wondered if he could do that without any incurring any tax and if we could accept that money without having to pay tax. I looked up non taxable gift amount and it looks like for 2023 it is $17,000. If he gifted that amount to me and the same amount to my wife that would pretty much cover the extra that we need. I am still unsure if we would need to pay taxes on that gifted money. If we do, then this plan will not work.
We plan to pay him back if we do accept the money and then wonder if he would have to pay tax on that money.
Anyway, I would appreciate your thoughts if you know the real deal on this type of situation.