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Gifting Down Payment to Fiance

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fightingpiper

Junior Member
My fiance and I want to purchase a home together. I currently own a home that would be sold for the down payment on the new purchase. She can get a mortgage loan at a much lower rate than I can. What are the tax implications if I gift her the down payment for the new home from the sale of my current home. The gift would be approximatly $72,000. Is this taxable since we are getting married or will we have to be married first for it not to be taxed. We live in Minnesota.
 
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abezon

Senior Member
Is she going to turn around right after closing & put your name on the title, even though it's not on the loan? If this won't trigger a 'due on sale' clause, it's an easy way around these problems. Otherwise, draw up a contract stating that you are giving her the down payment & specifying what share of equity you are entitled to upon sale.

Then the money isn't a gift, it's an investment. Either way, I suggest you document who paid what towards the house, in case you need that info in future.
 

LdiJ

Senior Member
fightingpiper said:
My fiance and I want to purchase a home together. I currently own a home that would be sold for the down payment on the new purchase. She can get a mortgage loan at a much lower rate than I can. What are the tax implications if I gift her the down payment for the new home from the sale of my current home. The gift would be approximatly $72,000. Is this taxable since we are getting married or will we have to be married first for it not to be taxed. We live in Minnesota.
You are treading a very dangerous path. I would recommend getting married first, with a pre-nup that ensure the return of your down payment in the event of divorce.
 

fightingpiper

Junior Member
Oh how dangerous can it be....we have been dating for 10 years and living together since 1999. Another reason to sell is so we can have some cash to fund the wedding and finally make an honest woman out of her.:D

We do plan on putting me on the deed as soon as we close. I also called the IRS and they said that I will have to report it but since I won't be above the $1 Million lifetime gift limit we won't have to pay taxes on the gifting of the down payment.
 

abezon

Senior Member
Keep in mind the IRS is often (30-40%) wrong when you call them. If you're going to be on the deed, the money you contribute is not an actual gift. A gift is not given in exchange for an ownership interest in a house. As long as the transfer of $$ & adding your name to the title deed happen reasonably closely in time, you don't need to file any kind of gift tax return.

If you really want to be a belt-and-suspenders type, draw up a contract that says you give her $$ & she has to put your name on the deed after purchase. This protects both parties.
 

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