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Best way to buy a house for another person? [USA] (lemmy.world)

submitted 5 months ago by [email protected] to c/[email protected]

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I'm in an extremely fortunate position where my Mom, upon learning about current mortgage rates and why I haven't bought a house yet, wants to essentially be my bank to buy a house. As in, she wants to fund the house, put it in my name, and I pay her a reasonable down payment and pay a "mortgage" to her at 2-3%. So what would be the best way to do this?She buys the house then transfers the deed? Should she just transfer the cash and I purchase it?

Side note: I know people are usually against doing big purchases with family, but I don't really see a downside since the house will be in my name, and with that 2-3% rate, the payments will be similar to my rent even considering maintenance and property tax.

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[–] LemoineFairclough 1 points 1 week ago

I would not "[transfer] the deed" for a house without it being part of a sale or talking to a legal and tax expert beforehand, since that could come with rate of tax of 40% for the IRS alone: https://www.irs.gov/businesses/small-businesses-self-employed/gift-tax https://www.irs.gov/instructions/i709#en_US_2024_publink1000292384

If the owner of the house is worth a lot and dies, the IRS could take 40% too: https://smartasset.com/taxes/all-about-the-estate-tax

There is a an "annual exclusion" that applies to gifts so that might help you transfer wealth without anyone dying: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes