gift equity

[jkstownsquare]

What is the name of your state?mo
Seaveral months ago I applied for a loan to purchase my Grandfathers home from the estate. My mother is executor of the estate. My loan office said I could use gift equity as a down payment. but they need a current appraisal to proceed with the loan. I hired the appraisor, paid the bank $400. and 40 days later got the appaisor out to view the home. I have spent $4500. remodeling the home because the loan officer stated that it would have to be nice and liveable. Now the problems-- the appaisor has not returned the paperwork to the bank. The first loan officer is out on personal leave. the second state that I will have to give her a copy of the Will and see if I can use gift equity. The home is assessed by the tax collector at $66000. I am borrowing $48000. I am waiting on the appraisal because I think the home is well worth $75,000. That should increase the gift equity Right? My aunts and uncle and mother set the purchase price at 48000, My grandfather paid $52000 for it 16 years ago. A letter from My mother, the estate exec. showing the gift amount is all that should be needed correct? Do I have to show the will to the bank? I am not listed in it, I am direct relation of the homeowner. This has been a battle for months. I need the right information to go and talk with the second bank loan officer and get this settled. As for the appraisor, what can I do? if I complain he will give a bad appraisal. I am really caught in a trap. js

[pojo2]

Do you want the loan? Then you will either have to comply with what the lender wants or walk. You can dispute the necessity of this with the loan officer but they are just trying to confirm several things by seeing the Will.

You still have not seen a copy nor had it given to your loan officer yet? Start raising he$$.

The loan officer's hands are tied until they get an appraisal.

I wish my home would sell for what my tax assessor says it is worth, but then again they have a motive to appraise high and that is money in their pockets.

Have you spoken with a Broker or just this one place? Go find one and see what your options are.

[Samm1970]

Has the propertyt been through probate? If not, you need to see a probate attorney for starters.

After that, you need to see a real estate attorney to prepare the pruchase agreement. If you are receiving a gift of equity, the purchase price stated on the purchase agreement needs to be for the value of the property which according to you is $75,000.00. Then the amount you would finance is $48,000, the true asking price. The purchase agreement needs to specify the amonut of money being gifted and for what, i.e. down payment, closing costs & prepaid expenses (taxes & insurance). The difference between the sale price and the asking price is what would be used as your down payment and closing costs, hence the gift of equity.

The lender has to be assured you are being gifted the property from the owner of the property - hence the need for the will.

Also, there will likely be tax consequences on the gift so you should also consult an accountant.

[pojo2]

If not, you need to see a probate attorney for starters.

Ummm why the poster is not the executor of the estate?

Also, there will likely be tax consequences on the gift so you should also consult an accountant.

No immediate tax consequences to the person receiving the gift.

[Samm1970]

Quote: Ummm why the poster is not the executor of the estate?

She should confirm probate has taken place to ensure clear title.

Quote: No immediate tax consequences to the person receiving the gift.

How do you know have you read the will?

[pojo2]

Originally Posted by Samm1970

Quote: No immediate tax consequences to the person receiving the gift.

How do you know have you read the will?

I do not need to see the will in order to know the OP will not pay taxes on a gift. This transaction of the other parties giving their interest has nothing to do with the original will.

I am not listed in it, I am direct relation of the homeowner.

Gifts are not taxable to the recepient at the time of the gift. Since we do not know the value of each of the estates of the givers we can not determine if there will be a tax consequence to them.

[pojo2]

Sorry forgot this

She should confirm probate has taken place to ensure clear title.

Exactly, and this does not have to be a probate Atty per say.

[Samm1970]

I do not need to see the will in order to know the OP will not pay taxes on a gift. This transaction of the other parties giving their interest has nothing to do with the original will.

Last I checked, gifts over $11,000 are taxed. The will has something to do with determining the value of the gift and whether taxes would be paid.

Gifts are not taxable to the recepient at the time of the gift. Since we do not know the value of each of the estates of the givers we can not determine if there will be a tax consequence to them.

I should have said "there may be" tax consequences.

I don't know, am I missing something here. You seem pretty confident on one hand that taxes won't be paid but then you admit we don't have enough information to know for sure. Point is she needs to be aware that gifts are sometimes taxable depending on the amount.

[pojo2]

Originally Posted by Samm1970

Last I checked, gifts over $11,000 are taxed. The will has something to do with determining the value of the gift and whether taxes would be paid.



Point is she needs to be aware that gifts are sometimes taxable depending on the amount.

WRONG!!!! I said we do not have enough info, their estates total value, to determine the GIVERS tax liability if any. But at the time of the gift there is no tax liability regardless of the size to the recepient. There is absolutely NO conflict in my statements.

The person receiving can in some circumstance pay the gift tax for the giver but this is by special arrangement between the parties.

[Samm1970]

I've always assumed that if taxes were applicable on a gift, they were charged to the gift receiver as income. Learned something new. Now I can go home and watch tv since I learned my one new thing for the day. I think I'll have a beer too.

[pojo2]

Originally Posted by Samm1970

I've always assumed that if taxes were applicable on a gift, they were charged to the gift receiver as income. Learned something new. Now I can go home and watch tv since I learned my one new thing for the day. I think I'll have a beer too.

Didn't mean to be harsh, so my apologies. When we can no longer learn we are dead.

[Samm1970]

Didn't mean to be harsh, so my apologies. When we can no longer learn we are dead.

WRONG!!!!! When we can no longer breath we are dead.

[jkstownsquare]

First, thankyou for the good information. My mother the executorix, sent it to a probate atty. My understanding is that all that is needed is the sale of the property to finish. The appraisor valued the home at $87000. Per the purchase agreement the set purchase price was $48800. The bank has almost all the paper work done but want a "copy of the title". And a letter of gift. Also there are questions about the selling price being so much lower than the purchase price. The sales agreeement states, "...inspected property being deemed by the all as severly distressed and neglected, in need of attention and repair. sellers agree to allow buyer to do needed repairs at the buyer expense prior to appraisal in order to obtain purchase financing...." The bank said it would have to be "nice" and "liveable" before calling the appraisor. I have spent at least $4500 parts plus double that on labor repairing the house.
Now the problem, the estate (mother, aunt and uncle) set the sales price at $48800. distressed. They agreed that my gift equity would be the difference at time of appraissal. My bank, now says my mother cannot give me more than her share of equity in the home and that the difference is almost half of the sale price. Also If I am thinking correctly, the gift would have to be on top of the purchase price, $48800 +gift. But if we change the contract to increase the price, it changes everything, taxes, fees, probate concerns. I know it is really messed up. But my money spent repairing the house, $13,500. this should not be included right? this should be my "buyer equity, already.? The bank wants the letter of gift equity, what can I do? Can I get letter from my aunt and uncle for gift equity? Again would that change the purchase price for probate and taxes? Or is the contract with the bank one seperate deal the court does not need to know about gifts, just pay $48,800 to the exec and court to distibute? Please any more words of wisdom? jacob

[pojo2]

At this point hire an Atty for a few hundred dollars and make sure this is all done right. Without benefit of every document from the Will forward no one can answer some of your questions and you absolutely want this to be done correctly. You are setting your basis in stone so to speak with all these transactions. Do it right, Atty.