The Most Wonderful Time of the Year (to Get Gift Funds)

It’s that time of year again when holiday gift giving is on everyone’s mind.  But you know me, compulsive mortgage professional, I want to focus on but a single aspect of the loan process — gift funds— this same form of largesse that is received by a fortunate few and for the purpose of purchasing a home. As we go into the holiday season, I want us all to keep in mind that right behind Santa’s sleigh is Auld Lang Syne. And when we’re talking tax implications for gift funds, this can matter.

For 2019, the IRS annual gift tax exclusion amount will remain at $15,000 per person per year. This is totally separate from the lifetime gift exemption, so let’s be clear to focus only on the annual amount for now. Here’s where things get interesting. Let’s say you have a young couple looking to purchase their first home. Let’s call them Jack and Jill. Jack’s parents agree to gift him $30,000, as each parent can make the annual gift of $15K to their son. If they do this in December of 2018, Jack will have $30K in his account that he can use towards his home purchase. But let’s say the property search plays out across year’s end. Now, assuming they’re financially capable, Jack’s parents could make another, combined, $30K gift in 2019 and still meet the annual gift exclusion threshold. Sure, Jack just more than doubled his gift funds available, but his folks, just by running out the clock on this year, effectively doubled their excluded gifts in the eyes of the IRS.

Now I know some of you are reading and chomping at the sleigh’s bit to remind me, “But WAIT! There’s more!” Indeed there is. Jack’s parents could give $15K each to both Jack and Jill, so that’s $60K total in this year AND another $60K on January 1. Where most would read the guideline and think $15K, we, at this time of year, now know that $120K is the outside limit of what’s possible without tipping off the annual gift exclusion police.

So this holiday season, I advise homebuyers to shake down their donors early. Don’t wait until the spiked eggnog has fully kicked in. If financially possible, get your first gifts underway in this calendar year, and then double them once January arrives. Skip the fruitcake or fabulous fur coat. In higher cost areas, where willing and able donors exist, this gift fund strategy is sure to bring cheer.

And a partridge in a pear tree, 


Robert J. Spinosa

Vice President of Mortgage Lending

Guaranteed Rate

NMLS: 22343

Cell/Text: 415-367-5959 Fax: 415-366-1590

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960

Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

What the NRA Can Learn from the Mortgage Business

Show of hands.  How many of you identify the mortgage business, or better still, the subprime mortgage business, as the face of the last economic downturn?

Right or wrong, our industry served as the convenient scapegoat for what was, in reality, a much larger issue.  As a result, we were specifically rewarded with a tectonic shift in regulation and oversight in the years that followed.  The wrath of the pendulum swing exceeded even our wildest expectations.  The legislative edicts ushered in by the Dodd-Frank Wall St. Financial Reform Act, and its appointing of a top cop in Richard Cordray of the CFPB, dawned a Dark Ages of credit availability.  And though we’ve since become quite adept in making more with less, our industry will never be the same as a result.  Some would say we had it coming.

Though the record will reflect that I was never a purveyor of subprime or stated income loans myself, I thought I would share my enlightened experience with the NRA.  It seems to me they are finding themselves on the business end of a growing chorus of Americans who sense that a change is in the air and that the National Rifle Association is, this time around, the industry with the target on its back.  That when innocent people are being gunned down in schools, at a concert or nightclub or, Lord have mercy, at church, something ain’t right.  And I believe that one of these mass tragedies or another, or another, or another is going to be a last straw, a final stick in the spokes that sends the NRA’s whole Second Amendment joyride to a caterwauling, head-over-the-bars crash of spectacular proportions.  But it doesn’t have to be this way.  No, this relative calm before the storm is the NRA’s opportunity to carefully concede, on some of their own terms, to ideas whose times have clearly come.  This is their last chance to marshal the last chance their brakes might arrest the careening descent of their overburdened, dilapidated old truck of ideas about gun ownership and gun rights.  Before the wheels come off, they can either figure out what’s most important to their constituents, carve it out and keep it, or they can keep on barreling down their path to oblivion.

The mortgage business never sobered up.  We couldn’t police our own punch bowl and leave the party in time so it ultimately took a Big Bang before it all went bust.  After the smoke cleared, many walked away with tail between legs and without shirt on back.  In retrospect, seems like cutting a bargain or two to avoid a complete meltdown, followed by a complete lockdown, would have been a sweet deal.  But no, not us.  We, too, were once invincible.  We goaded them to come pry the NINJA loan out of our cold, dead hands.  Then eventually, inevitably, they did.

Now it’s the NRA’s turn to get on the right side of history, embrace sensible change and help move America forward on this very complex and important debate.  Or, they can continue to party like it’s 1899.  If they do, they gotta know the cops are on their way.

Knock, knock, knockin’ on heaven’s door, 

Robert J. Spinosa