My husband lost his job last summer right before we closed on the home that we spent the last year building. In order for us to get the home and not lose out on our construction deposit, his parents generously bought the home for us using their cash AND our cash that we would have used for our downpayment (purchase price = $533,000, our contribution $100,000, their contribution = $433,000). Now we are in the position to buy the home back from them. The lender is telling us that we can buy the home from them for $433,000 and then the equity (basically our $100,000 plus the bit that it has appreciated) will need to be gifted us as our downpayment. My question's are #1 - do we need to record giving/loaning them that money that would have been our downpayment? #2 - When they do their taxes and report the purchase of a home and then the selling of that home 6 months later, what are the repercussions? #3 - We'd like to avoid them needing to report the gift of equity and having it come from their lifetime allowance. Can they "gift" the money to my husband, myself and my 4 children to avoid reporting this?
