Gift of Equity

Gift of Equity

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Gift of Equity

Gift of Equity definition:  A gift of equity occurs when property is sold to a family member for less than market value.  The difference between market value and the sale price is the gift of equity and affects the cost basis for the new owner and potential capital gains.  When a letter is signed, the mortgage lender may consider the gift of equity as the down payment for a mortgage loan, allowing younger family members to begin home ownership without saving for a down payment.

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