Gift Of Equity Contract Example For Real Estate In Salt Lake
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Use Form 709 to report: Transfers subject to the federal gift and certain generation-skipping transfer (GST) taxes. Allocation of the lifetime GST exemption to property transferred during the transferor's lifetime.
Non-Family Members – In some cases, individuals with a close personal relationship may also be able to gift equity. This can include close friends or individuals with a significant personal connection.
A “gift of equity” refers to a gift provided by the seller of a property to the buyer. The gift represents a portion of the seller's equity in the property, and is transferred to the buyer as a credit in the transaction.
Gifted equity requirements The letter should be signed by the buyer and the seller. Funds must also be properly documented through financial records. So, be prepared to provide copies of your recent bank statements, your donor's recent bank statements, and copies of cashier's checks.
For example, if you own a home worth $300,000 and sell it to a family member for $200,000, they've received a gift of equity of $100,000. A gift of equity can occur if a home is given away for no compensation or if a discount is offered on its value.