<My wife and I are about to purchase a home and my parents are going to help with the down payment. On the IRS site, I read that a person can gift any other person tax free up to $10000. The way I intrepret it is that my Dad can give me $10K and my mom can give me $10K and then repeat the procedure on my wife this way we can have up to $40K for OUR down payment and there are no tax headaches. My questions are:1. Are there any forms that need to be filed with the IRS and from whom? 2. Since we both file jointly can my interpretation above hold?=== === ===Answers:1) No, as long as it is $10K or less per person from each parent, as per your plan.2) Yes.>===========I agree with the basic answer. One point of further detail is that you should be able to "prove" a paper trail. If the payment is made to you alone by one 40k check from an non-joint account, you could have a problem. The end result may look the same as you and your wife will have a 40k down payment. You should have separate 20k checks made out to you and your wife coming from your parents joint account. Another way to do it would be to have a written statement drawn up and witnessed by a lawyer. The statement should summarize the transaction that is taking place. Remember, you do not have to do anything at all if you chose to. However, if there is ever an audit somewhere down the road, the burden of proof is on you. The audit could come as a result of your parents estate issues or when you sell your home later or even in the event of a divorce. On a more practical note, your mortgage company may want to know the source of the funds. They would want to be assured that the funds were not a loan that would effect your ability to pay your mortgage. If it were considered an existing loan, you may not qualify for the mortgage. Just something else to consider.BRG
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