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gift of equity letter

When you purchase a home at a price lower than its actual sale price because the seller may have offered to pay a certain part or whole of the down payment as a gift, then the down payment amount gifted is known as gift of equity. If you're accepting a gift of equity from the seller, request the latter to provide you with a gift of equity letter so that you can submit it to the lender as a proof of the gift of equity. When you receive a gift, you need not pay any tax on it. However, the person offering the gift may have tax liability as discussed at http://www.mortgagefit.com/gift.html#exemption. For a sample of the gift of equity letter, refer to http://www.mortgagefit.com/know-how/giftequity-letter.html. You may also ask your lender to provide you with a format of the letter.

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Guest Guest 0.10 Dollars($)	Posted: Tue Feb 13, 2007 11:06 am    Post subject: gift of equity letter hi, I was planning to buy a house with gift of equity. The lender ask for gity of equity letter in order to process the loan. I wasn't sure how to write a letter or should it come in a form. Can someone help me out? thanks. _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
sugden Guest 0.10 Dollars($)	Posted: Tue Feb 13, 2007 12:16 pm    Post subject: The person who is gifting the equity will make out the letter stating the amount they are gifting and the other details. You should consult the lender about the details that are to be included in the letter. If it would be a taxable gift, then the person gifting the equity would have to report it on IRS Form 709. You can get the details about tax implications for the person gifting the equity from this IRS page: http://www.irs.gov/pub/irs-pdf/p950.pdf
kenstampe Moderator Joined: 22 Jan 2007 Posts: 146 Location: Dallas, TX 50.64 Dollars($)	Posted: Tue Feb 13, 2007 2:24 pm    Post subject: Don't let sugden get you worried about the gift tax in most cases. Yes it can have a tax implication and you DO need to have a CPA give you tax advice. That said, the 2006 exclusion was $12,000. In other words if you are getting a gift of equity of $12,000 or less then the GIVER has not tax impact. If you are getting a gift greater than $12,000 there still may be no tax impact but it would depend on how the GIVER files the gift tax return. Even if you are getting a gift of $100,000 the GIVER may not pay any taxes in conjunction with the gift but it would limit the amount of their lifetime exemption from gift taxes. Make sense yet? Call your CPA or have the giver call their CPA. As for the letter itself, ask the lender to provide you a gift letter form or example. If they can't provide one then use common sense and it should include the following: giver getter property amount what strings (if any) what time frame _________________ Ken Stampe is a Mortgage Loan Originator, Mortgage Author and Mortgage Loan Officer Instructor living in Dallas, TX. Contact by email at
adonis Joined: 22 Oct 2005 Posts: 1346 Location: ALASKA 122.17 Dollars($)	Posted: Wed Feb 14, 2007 5:33 am    Post subject: You can ask the lender to help you out. He may be able to show you a sample letter for the gift of equity purchase. _________________ Procrastination is the enemy of your financial sucess
Mortgage girl Guest 0.10 Dollars($)	Posted: Thu Feb 22, 2007 8:54 pm    Post subject: gift of equity my wife and I are selling our home to my brothers uncle in the tune of 400K the home is valued at 550K. Can I give the difference as a gift of equity without a tax penalty What could be the down side and to whom would it effect I Live in New Jersey
Alex Guest 0.10 Dollars($)	Posted: Thu Feb 22, 2007 10:06 pm    Post subject: Mortgage girl, Any individual conveying his interest in property to some other person can avoid paying taxes on the gift-transfer known as gift tax. But for that, the value of the property transferred to a particular person should be limited to $12000 in a particular year. Then only the the transfer is considered as gift. However, if a person transfers property valued for more than $12000, he can be exempted from paying taxes on the first $12000 of the property value. Also, anyone can transfer property worth $1,000,000 in total in his lifetime prior to paying gift tax.
SHARLEE2004 Joined: 03 Nov 2006 Posts: 48 Location: Florida 23.63 Dollars($)	Posted: Wed Feb 28, 2007 8:48 am    Post subject: Gift of equity The lender or mortgage broker should be able to provide the actual 'Gift' form to you. Lenders have a list of 'FORMS' and it would be the same form used for 'Gift Money' instead of money as the gift, it is the 'Equity'. _________________ I Fix Morgages 4 U Carteret Mortgage Corporation Senior Mortgage Consultant 321-749-3896 Direct www.ifixmortgages4u.mortgagefit.com www.carteretmortgage.com/shsl
blue Joined: 21 Oct 2005 Posts: 1138 Location: MARYLAND 135.15 Dollars($)	Posted: Fri Apr 13, 2007 3:36 pm    Post subject: Hi Guest, Quote: The lender ask for gity of equity letter in order to process the loan. I wasn't sure how to write a letter or should it come in a form. You can use the format for a gift of equity letter other community members have provided on this page: http://www.mortgagefit.com/know-how/giftequity-letter.html Do let me know if you have any other questions. Thanks Blue

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