Mom has 200k in Ira to help us with home purchase. She is over 65 and has a job, and will start collecting SS. What is the best way for us to proceed. My wife and I can qualify for the conforming loan and make all the payments. But we need help with the down. How she can get the money to us without being penalized or heavily taxed? Should she be on the deed then quitlclaim, loan the money then forgive?
2007-10-22 05:56:09 · 5 answers · asked by ryan h 1 in Business & Finance ➔ Personal Finance
I like Judy's answer because it addresses the tax concerns. I don't know of any way your Mom can withdraw the money, and not be heavily taxed on it without the appearance of impropriety. What you can do to avoid that $12,000 max issue is for your Mom to keep paying all of your bills while you set aside the money for the house. You probably spend $5,000/mo? $12,000+$12,000+$30,0000 (six months) $54,000 instant down payment.
Your Mom should then continue to utilize tax deduction strategies to offset the tax on drawing from her IRA. She may be able to ease the blow if she draws from the IRA slowly so that her tax liability is lower due to being in a lower bracket. It will also allow her to maximize deductions over time.
Stop rushing your Mom. New and better houses will always be around. Take a year, two years to make this purchase. Trust me, you're not losing out on anything. Your house isn't going to skyrocket you any returns in the near future.
2007-10-22 08:21:02 · answer #1 · answered by Legend 4 · 0⤊ 0⤋
Since she's over 59-1/2 she won't pay a penalty on the withdrawal, but she will have to pay income tax on whatever she takes out, at whatever her rate is for the year.
There wouldn't be any advantage to her being on the deed, and she can just give you the money rather than going through steps of first a loan, then forgiving it - that would have more complications, and wouldn't be any advantage..
If her gift to you is over $12K, she should write two checks, one to you and one to your wife. That way if the total is under $24K she won't have to file a gift tax return. If either check is over $12K she'll have to file a gift tax return, but unless her total reportable gifts over her lifetime have been over $1 million, she won't have to pay a gift tax.
2007-10-22 13:04:25 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
Your mother is crazy to give her retirement to you, an example of enabling. Why don't you save the money yourself and be an adult instead of taking advantage of your mother? You ask if she should be on the deed? Yes, since it was her money that got the house. Pathetic, get a life and do it yourself. Take out a second loan that will cover the downpayment if you want, don't raid your mother's retirement.
2007-10-22 13:04:17 · answer #3 · answered by william k 5 · 5⤊ 1⤋
I would wait a year until the prices have come down all the way!
2007-10-22 13:05:31 · answer #4 · answered by Anonymous · 1⤊ 0⤋
you can take a new house
2007-10-22 13:00:42 · answer #5 · answered by smartboy 2 · 0⤊ 1⤋