me and my fiancé are in the process of buying a house and my soon to father in law offered to help with the down payment. He offered to give us $120,000 to use for the down payment that we could pay him back for plus a small amount so that we do not have to pay interest with a loan from a bank. I am wondering what the best way to go about this so that my father in law does not have to pay a large amount of taxes. Should we file the money as a gift or write it as a loan we will pay back or is there a third option I am not aware of? Just looking for the best way to go about this from a tax stand point.
