Mortgage Co-Borrower and Gifting

My mother owns the house my fiance and I currently live in. We (the three of us) would like to sell the home and my mother wants to use the profits as a down payment on our new home; she will be the third co-borrower/ a non-occupying borrower.

Would the down payment used for the new home still be considered a Gift from my mom or because she is listed as a co-borrower, there would not need to be a "formal" signing over of a Gift for tax purposes and it would just be a normal down payment on a home?

Thank you!

posted

It would not be a gift if your mother was a co-owner. It would be a gift if she gave you ownership of the property.

Keep in mind that even if she has to file a gift tax return, there is a lifetime exclusion of gift tax on the first $11 million in gifts, so it would likely not result in any tax.

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