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...They could gift $28K ($14K from each parent) this year, and another $28K in January 2016…

Or, they could give $60k in August of this year, and just include IRS Form 709 when they file their income taxes. There won't be any taxes due until after the parents die, and probably not even then.

Regarding a loan, many decades ago my parents lent DH & me money for the down payment for our first house. They filled out a gift letter, and we called it a gift. I decided it wasn't fraud because the lender was interested in loans that we were legally obligated to pay, and in the case of the parental loan, there was no paperwork indicating it was a loan, there was no collateral, and if in fact parental loan payments ever interfered with our mortgage payments, our parents would have forgiven or extended the loan. We repaid my parents as agreed, and have never missed a mortgage payment. So I'm not too much of a purist regarding parental gifts vs loans, because it can work out well.

However, the parents must follow The First Law of Making Personal Loans: Be prepared to make it a gift.

I've also loaned money to relatives, but only money I could afford to lose in case of complications. Luckily, I've always been repaid (even when I've offered to forgive the loans), but it's best to not count on that.
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