Emanuel Stewart - Reliant Home Lending

  • Home
  • About
  • Blog
  • Mortgage Info
    • FAQ
    • First Time Home Buyer Tips
    • First Time Home Seller Tips
    • Closing Costs
    • Home Appraisal
    • Home Inspection
    • Loan Checklist
    • Loan Process
    • Loan Programs
    • Mortgage FAQ
    • Mortgage Glossary
  • Resources
    • Links
    • Forms
  • Apply
    • Credit Application
    • Long Loan Application
  • Contact

How to Give the Ultimate Christmas Gift: Paying Off a Family Member’s Mortgage

December 1, 2015 by Emanuel Stewart

How to Give the Ultimate Christmas Gift: Paying Off a Family Member's MortgageChristmas is just around the corner, and if you’re in a position to do it, paying off a family member’s mortgage is one of the biggest gifts you could give this holiday season. A mortgage can be a heavy burden on a young homeowner, which is why paying it off is the ultimate act of charity. But when it comes to paying for someone else’s mortgage, the process isn’t entirely straightforward.

So how do you pay off a family member’s mortgage? Here’s what you need to know.

Be Wary Of The Gift Tax

Under US law, you can provide a cash gift to someone else – entirely tax-free – as long as it doesn’t exceed the annual limit for that calendar year (for 2015, the annual limit is $14,000). If the gift amount exceeds the annual limit, you’ll need to pay tax on the difference or tap into your lifetime exclusion.

The IRS gives all citizens a unified credit/lifetime exclusion, which allows the transfer of up to $5.43 million – tax-free – over the course of your lifetime. If you exhaust this amount, you’ll need to pay taxes on all financial gifts you give thereafter.

Make Sure You Write A Gift Letter

If you plan on paying off a family member’s mortgage, you’ll want to include a gift letter with the payment – otherwise, the bank and the government may believe the money is a loan. A gift letter clearly states that you are giving money to a relative to assist them with a mortgage. In your gift letter, you will need to plainly state that you have no intention of ever seeking repayment and that you claim no ownership stake in the property in question.

Remember: You Don’t Get To Claim Mortgage Interest

Mortgage interest payments are usually a tax-deductible expense – if you’re the homeowner. But if you’re paying someone else’s mortgage, you’re not eligible to deduct the interest on your taxes – only the homeowner can do that. Even if you feel a personal obligation to assist the homeowner in paying the mortgage, it’s not your debt to pay – and that means you can’t claim interest on your taxes.

Paying off a relative’s mortgage is a fantastic gift that will help your relatives to get out of debt and pursue their life goals. And although it’s a fairly straightforward process, you still need to take the time and care to ensure you process the gift properly. Contact your local mortgage professional to learn how you can give the gift of a mortgage.

Home Mortgage Tips Tagged: Home Mortgage Tips, Mortgage Payments, Mortgages

Emanuel Stewart Profile Photo

Contact Emanuel


Mortgage Broker

Call (225) 313-6189

NMLS ID 107678
Reliant Lending
  LOAN APPLICATION
  CREDIT APPLICATION
  FREE RATE QUOTE

Connect with Me

Let’s Keep In Touch!

  • This field is for validation purposes and should be left unchanged.

Logos BBB
Equal Housing Lender
NMLS Consumer Access

Quick Links

  • About Us
  • Accessibility Statement
  • Blog
  • Contact

Previous Posts

Categories

Looking For Something?

Reliant Home Lending
8550 United Plaza Boulevard Suite 702
Baton Rouge, LA 70809

Copyright © 2022 Emanuel Stewart – Reliant Home Lending  ·  All rights reserved   ·   Log In