Can we gift equity to my daughter if she is buying my father’s house from the estate? 13 Answers as of May 14, 2014

My dad left his house free and clear to be divided among his four children. The house is in probate and my sister is the executor. My daughter is buying the house from the estate. The house was appraised by the bank for $68,000 and we are selling it to her for $60,000. Can we, the beneficiaries, gift her the equity to cover down payment and closing cost? She is approved for a Federal Housing Administration loan. All four of the beneficiaries of the estate agree to gift the equity if it is possible. Thank you.

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Christine Sabio Socrates Attorney at Law | Christine Socrates
Yes, if all beneficiaries are in agreement, this can be done with approval by the court.
Answer Applies to: Ohio
Replied: 5/14/2014
Stephens Gourley & Bywater | David A. Stephens
Yes as long as the mortgage company does not object.
Answer Applies to: Nevada
Replied: 4/28/2014
Law Ofices of Edwin K. Niles | Edwin K. Niles
Why not?
Answer Applies to: California
Replied: 4/25/2014
James T. Weiner & Associates, P.C.
James T. Weiner & Associates, P.C. | James T. Weiner
Yes you may gift her enough equity to cover the down payment and closing costs. equally if all beneficiaries agree.
Answer Applies to: Michigan
Replied: 4/25/2014
Frederick & Frederick PLC | James P Frederick
Yes, this can certainly be done.
Answer Applies to: Michigan
Replied: 4/25/2014
    James Law Group
    James Law Group | Christine James
    Yes they can, but it needs to be in writing and run through the probate with a proper Notice of Proposed Action so it does not come back on anyone.
    Answer Applies to: California
    Replied: 4/25/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Dara Goldsmith
    That will probably not fly with the lender. They will then treat the purchase price at $60,000. It sounds like you want to treat it as $68,000 with her "owning" $8,000 equity.
    Answer Applies to: Nevada
    Replied: 4/25/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Generally, the FHA will treat the sales price as the value of the house. They aren't impressed with the argument that "the house is really worth $68k but we are gifting her $8k by selling it for $60k". They allowed a ton of that and it was one of the major causes of the financial crisis.
    Answer Applies to: Ohio
    Replied: 4/25/2014
    Irsfeld, Irsfeld & Younger LLP | Norman H. Green
    Yes, but be sure to file your gift tax returns.
    Answer Applies to: California
    Replied: 4/25/2014
    Peters Law, PLLC
    Peters Law, PLLC | Mark T. Peters, Sr.
    You need to talk with the lender to see if it is allowed. Your daughter's mortgage broker should have the answer.
    Answer Applies to: Idaho
    Replied: 4/25/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    See an attorney, certainly that should be possible legally, the question is going to be whether or not it is satisfactory to the lender.
    Answer Applies to: Michigan
    Replied: 4/25/2014
    Ashcraft & Ashcraft, Ltd.
    Ashcraft & Ashcraft, Ltd. | Randall C. Romei
    It is possible to gift the equity but the gift has to be disclosed to the lender and has to done in a manner that is acceptable to the lender. If the estate has sufficient cash it should make a cash gift to the daughter and the daughter would deposit the check and write an earnest money deposit check in the same amount to the estate as a credit against the purchase price. The four heirs should consent to the gift in writing and acknowledge the gift as a partial distribution of the estate that they want delivered to your daughter on their behalf. The lender will probably require each heir to execute a gift letter. The mechanism of this gift should be reviewed by the loan officer your daughter is using to make sure the underwriter will not consider this gift to be a reduction in the purchase price. It may be that the gifts will have to be made as a partial distribution to the heirs and then the heirs independently make the gifts to your daughter. It may be that the gifts should be disproportionate, in other words your gift might be greater so that the relative shares of the gift is not the same as the shares due the heirs in the estate.
    Answer Applies to: Illinois
    Replied: 4/25/2014
    Law Office of Pamela Braynon | Pamela Y. Braynon
    I can't find any precedent that says it'll be a problem.
    Answer Applies to: Florida
    Replied: 4/25/2014
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