Co-op buying and taxes.?

Question

Hi,
1) I am planning to buy co-op in NY. I will be the sole owner for this apt. My parent is going to help me put down $40000 as downpayment(it will be like a personal loan to me). It's going to be a bank check make payable to the seller of the co-op. (I am putting down additional $35000 myself). Will this transaction get reported to the IRS. Does it effect her or me in anyway?

2) My brother just wrote me a personal check for $10000.00 as a gift. If i deposit this personal check from him, is it going to be reported to the IRS??
thanks very much.

thanks for your reply.
The property itself is $170000.00.
$40000 is coming from my mother's account as a help to paid for the downpayment which i might or might not need to pay back.
$35000 is coming from my own account.
$10000 is gift from my brother.
Possibly another $40000 is coming from my father which will also paid to the seller of the co-op. He said that I do not need to paid him back until my financial situation allows me to do so.
So all these transaction will send a report to IRS?
after all this will lead to around $45000 mortgage.
thx again.

Answer 1

Not enough information to evaluate the situation properly.

Are you coming up with the $350,000 in cash from your own funds or is this coming from a mortgage? If it's a mortgage, the lender will require a gift letter from your parent. It will have to state that it is a gift with no expectation that it will ever be repaid. That will establish the requirement that a Gift Tax return be filed by the donor. No tax may be due but since it exceeds their annual exemption amount of $12,000 the return will be required. (Gift Tax is levied on the donor, never the recipient.)

If you already have the $350,000 in cash, the $40,000 can be a loan. However it must be at market interest rates or there may be tax consequences for the imputed interest not charged or paid.

The check from your brother will trigger a report to the Treasury Department (as will the one from your parent) but it is intended to track money for criminal acts such as money laundering, drug dealing and terrorism. As long as you can document that it was a bona-fide gift or a loan there won't be any issues with it. And since it is less than $12,000, your brother will not need to file a Gift Tax return.

Answer 2

The gifts from your parents are reportable by them since they exceed the $12,000 annual exclusion. It might be wise for each of them to give you $12,000 in 2007 and the balance in 2008 (2 weeks from now or later). That would reduce the taxable gifts by $24,000. Each of your parents can give $1,000,000 taxable before they pay a gift tax so, if they have not made substantial prior gifts, they don't have to worry about this costing any money. But they should file the form 709 gift tax returns.

The payments will not be reported by the bank to the IRS as Bostonian has suggested. That is only for cash payments, not payments by check.

Good luck.

Jim Kirby, CPA

Answer 3

Sorry, yet you're purely lacking the factors. You for sure do no longer qualify for the 1st time assets owners credit because of the fact which you recently owned a house. you do no longer qualify for the long term resident credit because of the fact which you probably did no longer very own your previous abode for 5 years. There at the instant are not any tax credit which stick to on your concern.