Updated over 4 years ago on . Most recent reply
Gift of Equity Purchase Question
Hello all, I'm buying a rental property that I'm going to move into from my grandfather at a discount. When I told my lender he suggested I use a "gift of equity" as the down payment and that way I wouldn't have to come up with anything down (if the property appraised). For example: if my grandfather wants $200k for the property and it appraises at $250k then the gift of equity = $50k which would act as my 20% down payment. This is how he explained it to me. However, now with $50k gift of equity + $200k to my grandfather, he noticed that the purchase price increased from the agreed upon $200k to $250k and my grandfather is afraid he will have to pay more taxes due to a higher purchase price. Does anyone know if he is correct? I asked my lender and he said nobody has ever asked that question. Thank you.