Q: How would split payment methods for a home purchase between two individuals be viewed by the IRS?
I am looking to purchase a home with a family member, however we are looking to split the total purchase cost where they are paying their half up front and I am getting a mortgage. We both will be on the title, but I would be the sole holder of the mortgage. From the IRS' perspective, is their half of the purchase payment considered a gift and therefore subject to gift taxes, or is it classified as something else since they are getting half ownership of the property in return?
A: Your question is confusing. The IRS has nothing to do with the purchase and there are no reporting requirements at purchase. I don't see anything resembling any gifting either. I would need to know your concern to be able to address your concerns. Sorry.
A: Based on the details provided, this situation would not be considered a gift. The other family member is paying for their half of the property upfront, and you are using debt to pay for your half. There is no transfer of assets between you and the other family member. Your ongoing mortgage payments will go to the mortgage company, not your relative.
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