Guidance Structuring a Gift of Equity for Two Investment Properties

General Real Estate Investing
10moFollow

Guidance Structuring a Gift of Equity for Two Investment Properties

Tes Oakley
Member since 2021 · 1 post · 2 votes

Hi Everyone!

My name is Tes and I'm looking for some advice or guidance on how to properly structure a gift of equity for two homes I'm purchasing directly from my parents.

Here are a few details:

- There are two properties -- one in Raleigh, NC and the other in Jacksonville, NC.

- Both homes are currently owned by my parents and I'll be purchasing directly from them.

- These will be investment properties, not primary residences, as I currently live in San Francisco, CA.

- I've already started the pre-approval process with a credit union based in North Carolina, but I'd love some help understanding how to structure the gift of equity correctly for investment properties, what documentation may be required, and if there are any specific limitations or tax implications I should consider.

- My goal is to close on both homes by the end of the year or early next year.

If anyone has experience with gift of equity transactions for invest properties -- especially in North Carolina or involving out-of-state buyers -- or can recommend a loan officer, lender, or real estate attorney familiar with this setup, I'd really appreciate your insight.

Thanks in advance!

2Reply
77 views

Most Popular Reply

Alfath AhmedBusiness Member
Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
10mo
Quote from @Tes Oakley:

Hi Everyone!

My name is Tes and I'm looking for some advice or guidance on how to properly structure a gift of equity for two homes I'm purchasing directly from my parents.

Here are a few details:

- There are two properties -- one in Raleigh, NC and the other in Jacksonville, NC.

- Both homes are currently owned by my parents and I'll be purchasing directly from them.

- These will be investment properties, not primary residences, as I currently live in San Francisco, CA.

- I've already started the pre-approval process with a credit union based in North Carolina, but I'd love some help understanding how to structure the gift of equity correctly for investment properties, what documentation may be required, and if there are any specific limitations or tax implications I should consider.

- My goal is to close on both homes by the end of the year or early next year.

If anyone has experience with gift of equity transactions for invest properties -- especially in North Carolina or involving out-of-state buyers -- or can recommend a loan officer, lender, or real estate attorney familiar with this setup, I'd really appreciate your insight.

Thanks in advance!


 I would speak with an attorney. I think there are better ways to do it so that your parents can avoid capital gains tax. One way to do it is to have your parents put the assets in a trust and make you the trustee. 

Speak with an attorney and they can offer better guidance.

[email protected]614-802-5698
ReafCo | Ahmed Group 530 Reviews
WebsiteView Page
1Reply
See this reply in the discussion

3 Replies

Jump to latestLatest
  • Alfath AhmedBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
    10mo
    Quote from @Tes Oakley:

    Hi Everyone!

    My name is Tes and I'm looking for some advice or guidance on how to properly structure a gift of equity for two homes I'm purchasing directly from my parents.

    Here are a few details:

    - There are two properties -- one in Raleigh, NC and the other in Jacksonville, NC.

    - Both homes are currently owned by my parents and I'll be purchasing directly from them.

    - These will be investment properties, not primary residences, as I currently live in San Francisco, CA.

    - I've already started the pre-approval process with a credit union based in North Carolina, but I'd love some help understanding how to structure the gift of equity correctly for investment properties, what documentation may be required, and if there are any specific limitations or tax implications I should consider.

    - My goal is to close on both homes by the end of the year or early next year.

    If anyone has experience with gift of equity transactions for invest properties -- especially in North Carolina or involving out-of-state buyers -- or can recommend a loan officer, lender, or real estate attorney familiar with this setup, I'd really appreciate your insight.

    Thanks in advance!


     I would speak with an attorney. I think there are better ways to do it so that your parents can avoid capital gains tax. One way to do it is to have your parents put the assets in a trust and make you the trustee. 

    Speak with an attorney and they can offer better guidance.

    [email protected]614-802-5698
    ReafCo | Ahmed Group 530 Reviews
    WebsiteView Page
    1Reply
  • Elealeh Fulmaran
    Specialist · Member since 2025 · 483 posts · 270 votes
    10mo

    Tes, keep it clean and lender‑friendly: have the purchase contracts show true market value, then reflect the discount as a seller credit labeled “gift of equity” from your parents, backed by a signed gift letter and proof they own the properties; expect the lender to require an independent appraisal, standard reserves, and that the gift only covers down payment/equity, not your required closing costs on some programs. Because these are investment properties and you’re out of state, line up a North Carolina real estate attorney to draft the sales, deed, and any gift addenda correctly, and ask your loan officer upfront about their rules on gift‑of‑equity for non‑owner‑occupied deals, seasoning of title, and any cap on interested‑party contributions. Last, talk with a CPA about federal gift tax limits and basis implications for you and your parents before you set numbers, so the paperwork matches the tax plan

    0Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    10mo

    Hey Tes, congratulations on the opportunity to buy/inherit these homes from your parents! That’s the beauty of real estate & building generational wealth. Your parents could gift you equity in the property without triggering gift tax, as long as the value of the equity doesn’t exceed the annual exclusion limit ($19,000 per parent in 2025). However, like others have mentioned above, there are actually a few ways to handle this that could make it more tax-efficient than a straight gift or purchase.

    For example, your parents might think about putting the properties into an LLC and trust. This can help protect against liability, make management simpler, and keep things flexible for tax purposes. Another option could be an installment sale or loan, which lets you take ownership over time and can help reduce immediate gift or estate tax implications, while still letting you benefit from deductions and rental income.

    You’ll definitely want to talk through all of this with a CPA and an attorney so everything is set up properly. That way, you can make sure the income, deductions, and overall structure are optimized and get the most out of this opportunity. Good luck and happy to connect!

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®5241 Reviews
    WebsiteView Page
    TaxMD® | AI-Powered Tax Planning
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free