With most lenders requiring home buyers to put down at least 20 percent — and sometimes, with more expensive properties, an even greater amount — the best holiday gift some people might receive would be help with the down payment.
Under federal tax law, each individual is permitted to give away money or valuables worth up to $13,000 to a single recipient in a calendar year. A married couple could jointly bestow up to $26,000 a year per recipient.
“It really can be $52,000” if the recipient also has a partner, said Mike Maye, the owner of MJM Financial, a financial planning firm in Berkeley Heights, N.J.
The biggest barrier to buying a home these days is saving for the down payment, according to a survey released in September by Trulia. The survey, conducted over the summer by Harris Interactive, was based on responses from 2,207 people, including 758 renters who expressed an interest in buying a home at that time. Fifty-one percent of those renters said coming up with the money for the down payment was keeping them from buying (and 62 percent among adults 18 to 34), while 36 percent identified qualifying for a mortgage as the stumbling block.
There is also the option of lending a relative or close friend the money for the down payment, or the closing costs, then forgiving the loan in a future year, said Lori R. Price, a financial planner and owner of the Price Financial Group in Wilton, Conn. The recipient would have to pay interest on the loan until it was forgiven, at which point it would become a gift, Ms. Price said.
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