NEW mortgage crash coming soon...

I thought the difference is taxable too. Hope I'm wrong there.

 

Believe he would be taxed on $5000 at the end of the year. Him owning that house should help offset that.

 

Isn't the amount that you can "gift" to someone now at 12K a year or is it still 10K? I've never had to worry about this situation.

 

Thelt,
You may want to think about drawing up a rent-to-own contract with your sister showing some of thepresent (past, future) rent going towards a down payment. Set the sales price at the home value(what you believe is the appraised value, not tax value), have your sister show part of the difference as a gift. Gift allowance from one party to another would be 12K, but her spouse could also gift a like amount or she could also gift an amount to your spouse, if that applies. The only caveat I can see is: what are the tax consequences for your sister in counting the rental revenue as partial payment on the house.
This would keep your loan to purchase price below 80%, so the bank would not have any issues, and would not require PMI. Other people on this board can provide more expertise than I. This strategy is only a suggestion. I am not an attorney, and do not play one on TV.

N1r0l

 

The $5000 would be a taxable liability to his sister, not to him. Check with an accountant or Real Estate Attorney.

 

I am an accountant but I do not play a tax expert on TV or anywhere else. I do believe you are right though that the tax liability is with the giver.

 

Jes. We closed in Sept 2004. Refied in Jan 2006. When we were looking in 2003 every builder we dealt with pretty much just assumed we were looking for a piggyback loan as the starting point. Whatever got you in the house. I had to ask about a 30 year fixed and then have them run the numbers.

The refi guy: You sure? 30 year fixed? In this market?
Me: Yeah. I'm sure.
Him: You want more money then?

It was nuts.

 

Wow. No wonder it's caving in. No different than Nasdaq 5000.

 

Those rent to own things aren't cutting mustard with underwriters these days.

They'l want the appraiser to find comporable rents from the area. If he's renting for $1000 per month and the average is $1000, they won't accept that he's paying any of the principle.

Only way I've seen it done RECENTLY is a plain gift of equity. Thelt buys home for $100,000. Sister and her husband give $20,000 gift of equity. Thelt borrows $80,000.