I pay $60K to remodel a home before I buy it from my decest Grandma’s trust can the trust give me $60K taxfree
drewpps asked:
After putting 60K into the house I went to get a mortgage and purchase the house from the trust– the trust wants to get $240,000 out of the house. After my remodeling it is worth $330,000+. I was planning on using the the equity I created with my 60K and financing 80% and keeping some cash but no one will use the appraised value, they use the purchase price– so in order to not 100% finance I have to get 60K in cash before closing. Can the trust give me 60K without incuring tax penalties. Can the trust gift me the equity at close? How else could I walk away with a from closing with 10-20 K in my pocket, 20% equity in the home and no major tax hits for me or the trust?
Kansieo.com
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After putting 60K into the house I went to get a mortgage and purchase the house from the trust– the trust wants to get $240,000 out of the house. After my remodeling it is worth $330,000+. I was planning on using the the equity I created with my 60K and financing 80% and keeping some cash but no one will use the appraised value, they use the purchase price– so in order to not 100% finance I have to get 60K in cash before closing. Can the trust give me 60K without incuring tax penalties. Can the trust gift me the equity at close? How else could I walk away with a from closing with 10-20 K in my pocket, 20% equity in the home and no major tax hits for me or the trust?
Kansieo.com
January 10th, 2010 at 2:40 am
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Retain a tax lawyer, it’s good to have one, and ask that person.
January 11th, 2010 at 5:31 pm
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This doesn’t sound right at all, lenders use appraised value all the time and it doesn’t go off purchase price at all.
You need to check with a CPA, but I highly doubt the trust can gift you 60k without a tax implication. It will count as income, and you will be taxed at whatever rate is applicable to your situation.