Gift of Equity

A gift of equity is a type of financial transaction in which one party transfers ownership of a property to another party without receiving any consideration in return. The most common type of gift of equity occurs when a parent transfers ownership of their home to their child. In this case, the parent is essentially giving the child a down payment on a house.

There are a few different reasons why someone might make a gift of equity. For example, a parent may want to help their child get into a home of their own. Or, a parent may want to pass on their wealth to their children while they are still alive.

There are also a few different ways to structure a gift of equity. One common way is for the parent to simply sign the deed to the property over to the child. Another way is for the parent to sell the property to the child at a below-market price.

There are a few important things to keep in mind if you are considering making a gift of equity. First, you should make sure that you are aware of the tax implications of the transaction. Second, you should make sure that you have a clear understanding of the terms of the gift. Third, you should make sure that you have a written agreement in place that spells out the terms of the gift.

If you are considering making a gift of equity, it is important to speak to a financial advisor to discuss the pros and cons of this type of transaction.