If you are a homeowner, you’ve probably wondered if someone else could pay your mortgage payments. The simple and short answer is, yes.
There’s not really a special or complicated process that requires you to hand over your home or anything for someone else to make your mortgage payment. All the lender and banks care about is that your mortgage payment is paid, it doesn’t really matter who makes the payment. If you’ve ever found yourself in the situation of making someone else’s mortgage payments, below are some things you will want to keep in mind and some information on how your taxes will be filed in this situation.
The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.
This tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value, or if you make an interest-free or reduced-interest loan, you may be making a gift.
“If you give people a lot of money or property, you might have to pay a federal gift tax. But most gifts are not subject to the gift tax. For instance, you can give up to the annual exclusion amount ($13,000 in 2009 and 2010) to any number of people every year, without facing any gift taxes. Recipients never owe income tax on the gifts.
And you can give up to $1 million in gifts that exceed the annual limit—total—in your lifetime, before you start owing the gift tax. If you give $15,000 each to ten people in 2009, for example, you’d use up $20,000 of your $1 million lifetime tax-free limit—ten times the $2,000 by which your $13,000 gifts exceeds the $12,000 per-person annual gift-free amount for 2009.”
When and where to file:
Generally, the estate tax return is due nine months after the date of death. A six month extension is available if requested prior to the due date and the estimated correct amount of tax is paid before the due date. The gift tax return is due on April 15th following the year in which the gift is made.
Use the below mailing address for all tax forms filed at the Cincinnati Service Center including Estate and Gift tax returns:
Internal Revenue Service
Cincinnati, OH 45999
To mail FedEx packages, please use the following street address:
Internal Revenue Service
201 W. Rivercenter Blvd
Covington, KY 41011
FHA Loans and Noticeable Changes you will want to keep in mind:
FHA mortgage loan down payments can be payed as gifts. However, the gift donor is strictly limited to a relative. For more information contact your local branch.
Form 709-A is Now Obsolete
“Form 709-A, United States Short Form Gift Tax Return, is obsolete and should not be filed. All gift tax returns must now be filed using Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. If you are filing a request for an extension of time to file an estate or gift tax return, remember that the request must go to the Cincinnati Service Center, even if you file your income or other tax returns elsewhere.
Reasons why you might want to have someone else making your mortgage payments
* Your facing possibility of foreclosure or bankruptcy
* You miss one payment, and you don’t have extra money
* Your having trouble financially
* You want to transfer the property over to someone else(Look into information on how to do
* Laid off from work”