Helping your children buy a house.

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 As parents I am sure all of us with kids realize they don’t quit being our kids when they turn 18 years old. After they complete school we all want to help our children be successful in life. One thing many clients have asked me is how can we help our child purchase a house. 1. Gift. You and your spouse can each gift $14,000 to your child and to the child’s spouse for a down payment. This gives you a tax-free gift of $56,000 using the gift exclusion, and your child and his or her spouse have $56,000 for the down payment. The gifts should be in four separate checks. 2. Lend the money. If you lend money to your child to purchase a home, the child can deduct the mortgage interest that he or she pays you. You can create a really favorable interest rate for your child. Simply charge your child interest equal to the applicable federal rate. The rate for a long-term loan with monthly payments beginning in December 2016 was 2.24 percent a month. 3. Create equitable ownership. Perhaps your child cannot qualify for a loan but can make the mortgage payments. So you buy the home and take out the mortgage in your name, and your child makes the payments. Your child can deduct the mortgage interest if he or she can show that he or she is the equitable owner. Equitable ownership and legal ownership are two different concepts under the law. This can get complicated, so if this approach appeals to you, please call me and I’ll walk you through it. 4. Joint ownership. For tax deduction purposes, this is easy to make work. Your child can deduct the full amount of the mortgage interest that the child actually pays, even though the child is only a partial owner of the home. 5. Shared equity. If you prefer a more businesslike arrangement in helping your child achieve home ownership, the shared equity program could be the ticket. Under this arrangement, you create a rent-to-own program with your child. I’m happy to guide you through any of the possibilities for helping your child buy that home. We are here 7 days a week all year long. Call us if you need any help or have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you Regards, Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale/purchase of a business property in excess of $5,000 • Sale or purchase of a residence or other real estate.