If I give my son $150k for him to buy a property no interest. Do I need to do anything as it relates to taxes? I would just give him the money and he reimburse as he can.

[xmasbaby0]

You said "give" and then mention reimbursement.  Which is it?   A gift? Or a loan?    

[Vince456098]

Thanks, good question.

It would be a loan without interest

[Opus 17]

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@Vince456098 wrote:

Thanks, good question.

It would be a loan without interest

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The borrower does not have tax responsibilities.  However, you do.

If you make a loan, the IRS expects you to charge interest, and to report (and pay tax on) interest income, even if you don't charge interest.  Technically, the borrower pays interest (that you put on your tax return and pay taxes on) and then you return the interest to them as a gift.  That means that 

1. you report interest income equal to the interest you would have received if you charged at least the minimum applicable federal rate.
2. you report a gift on form 709 if the amount of forgiven (gifted) interest is more than $18,000 per year. (That seems unlikely in this case.)

For example, if you charge interest once a year, the current AFR is 4.34%.

https://www.irs.gov/applicable-federal-rates

That means that, if you loan out $150,000 on February 1, 2025, you would report $6510 of taxable interest income that would be received by you on February 1, 2026, and included on your 2026 tax return.  Or you can calculate interest quarterly or monthly if that's easier.  And if your son pays off the loan, the interest goes down of course. 

[Vince456098]

Thank you! Very helpful.

So I assume it is the best way to help our son get his first apartment with everything under his name?

[Opus 17]

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@Vince456098 wrote:

Thank you! Very helpful.

So I assume it is the best way to help our son get his first apartment with everything under his name?

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"What's the best way to help my son buy a home" is a lot more complicated, and not really a tax question.  Potentially, you could hold an official mortgage, that would give you some protection if your son got into financial trouble and couldn't repay you.  Or, you could give them money to afford a large downpayment so they could get a bank mortgage with more favorable terms.  That would help them with their credit rating, although the interest rate would be higher than the minimum federal rate.  These are the kinds of questions to take to a financial advisor.

[Vince456098]

Thank you again, you've been very helpful.

I'll follow your advice!