I would like to purchase a non-warrantable condo (due to a minor litigation in the building) that has been foreclosed on. I would have to pay cash as the litigation will not close before the November 30th first time home-buyers credit expires and I would like to get it at a reduced price. I plan on securing a traditional mortgage once the lawsuit has been cleared, but until then I only have approximately 60,000 of the 150,000 necessary for a proper offer (The parents’ loan would supply the rest).

I realize it cannot be considered a gift as it is much larger than 12,000 and I will be paying the monthly payments/paying off the loan once I get a mortgage. I am worried of the tax repercussions for myself/my parents as the loan will only be open for 2-6 months.

to be safe, write up an agreement on this loan, terms, dates, time etc and be sure to state some amount of interest
This probably will not ever happen but it is safe to state this interest because if it is not, it will be imputed by IRS at some time in the future
one never knows how long a law suit may last and your purchase seems to be contingent on this event

This entry was posted on Monday, July 12th, 2010 at 8:10 am and is filed under Tax Litigation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.