Many areas of the country are experiencing buyers markets, and current tax laws make this a very attractive time for parents to help their children become home owners. Prices and interest rates may never be lower than they are now, so strongly consider this potential investment in your children's and grandchildren's futures.
As parents, you can provide a significant down payment, free of taxation. Individuals may gift up to $13,000 per year, so two parents making gifts to their child can give a total of $26,000 in one year without paying gift tax!
Above and beyond the outright gift, you may loan your family money, as long as you charge a minimum interest rate, which is currently very low. Then you can make your gifts each year, and your child's family can use the gifts to repay the loan.
If neither of these options is attractive, you could purchase the home yourself and then set up a Qualified Personal Residence Trust (QPRT), with the home passing to the children at the end of an established term, tax free. You will need to consult with your financial advisor and employ an attorney to handle this kind of transaction. They'll be more than happy to help you help your family.
If you know somebody who is having trouble making their house payment, have them call the Kathy Henne Team. Kathy has earned the prestigious Certified Distressed Property Expert (CDPE) designation, having completed training in foreclosure avoidance and short sales. More and more lenders are willing to consider short sales because they are much less costly than foreclosures.
