Gifting Equity
Ok here is the situation...My mom owns a home (second/investment home) that has appraised at 60k but my mom has a first mortgage on the property for 30k. The house currently has a tenant in place. I want to purchase the property from my mom to get the equity(30k) out because my mom has no job and bad credit. Can my mom gift me the equity in the property? If so how does it work? Would I get a loan for 60k but my mom would actually sell it to me for 30k?
No takers?
she can gift you the fair market value of the home & reflect that on her gift tax return to the IRS. It may be audited so that the 30k value may be questioned. She has a $1,000,000 lifetime gift she can use. She can give you $11,000 gift per year with no tax. So in essence you will get a tax free gift of $11k, and $49k will be counted on your moms gift tax return.
Depending on the terms on the exisiting loan,You should then refinance to pull out the equity or just get a 2nd mortgage.