Cash Gift From Parents Can't Be Used for Investment Purchase?
Hey Folks,
I'm in the market for my first property (investment and otherwise) and was on the phone with a loan officer earlier today. The original plan was that my parents would match my cash contribution and classify it as a gift for tax purposes. The loan officer informed me that if my parents gifted me money, I would not be allowed to use that money for the purchase of an investment home. A personal residence yes, but not an investment home.
I am trying to understand why (and if) this is true. In my mind, if I get qualified based on my personal assets for a certain loan amount, why couldn't my parents come in on top of that and gift me money to use toward the purchase? Why would that have any effect on the loan qualification?
Additionally, he said even if my parents loaned me the money and there was supporting documentation, I would not be allowed to use it for the home purchase.
I'm pretty confused and I am hoping for creative solutions to the problem. I have a call again later this week and I want to have smart questions to ask him.
One thing I thought about was forming an LLC and having my parents contribute to that LLC. Would that be an option?
I'd like to understand how other people are able to obtain private money and legally purchase properties with it. Thanks!!