There’s a Right Way and a Wrong Way to Use a Cash Gift

Mortgage guidelines for Ridgewood Home Buyers are becoming more strict and down-payment requirements are increasing.  It wasn’t that long ago that you could finance a home with zero down. Today, many mortgages require at least ten percent down.

These changes have led to an increase in the number of buyers accepting cash gifts from family members

Gifts are Ok in most cases.  But if you don’t accept the gift the “correct” way, the bank could reject it.

You can’t simply dump a cash gift into your bank account. You need to follow a series of steps and keep good records.

1. You will need a gift letter signed by all parties.
2. You will need documentation of the gifter’s withdrawal of funds.
3. You will need proof of  giftee’s deposit of funds via teller receipts.

Banks and brokers require these steps for 2 reasons.  

1. They want to make sure that the cash gift is not laundered money. 

2.  They want to make sure the gift is really a gift and not some sort of loan.

Banks will typically require that a letter, like the one below, be included in your application:

I am the (relationship to borrower) of (borrower).  Please let this letter serve as proof that I am gifting (name of borrower ) (gift amount) to be used for the a home at (address of property).

This is a gift, not a loan, and I do not expect to be repaid.

Sincerely,

[Gifter Signature]

Buyers receiving cash gifts should make sure that gifted funds are not commingled at the time of deposit.  If the cash gift is for $15,00 the bank’s deposit slip should indicate that a $15,000 deposit was made.  No more, no less.  Don’t add a two hundred dollar deposit to the transaction.  The gift deposit should be a separate and distinct transaction.

Gifting funds between family members can create both legal and tax liabilities.  If you’re unsure about how donating or receiving a gift may impact you, call or email me directly.  If I can’t help you with your questions, I can refer you to somebody that can.

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What Clients Are Saying About Al Donohue…

Sanjay and Uvarshi Tiwary – Ridgewood
“Thank you very much for helping us sell our house. You and your team have lived up to the reputation of representing a great company and fantastic individuals. You have proven extremely trustworthy and effective in an otherwise terrible real estate market. Overall we are extremely fortunate to have had chosen you as our representative for this transaction. I want you to know that we will return to NJ in a few years and we’ll be knocking at your door to help us find a place!”

Christine Bremer joins MGD

“I am thrilled that Christine decided to join our Ridgewood office,” said Aloysius Donohue, a managing partner at the firm.  “Christine has great interpersonal skills and she is very bright but her greatest attribute is probably her passion for all things related to real estate. She can speak intelligently about everything from architecture and restoration to local building codes.  This is very rare in a newer agent.”

As a Realtor Associate, Christine says she is focused on delivering exceptional service to her clients. Her passion for real estate and all related areas (architecture, interior design, home staging/styling, renovation, and restoration) enables her to (1) help buyers find homes in which they can envision themselves living, and to (2) assist sellers in preparing their homes for achieving maximum potential. Christine is a sincere and trusted partner throughout all stages of the process; she recognizes that every client’s situation is unique, and she is committed to finding a solution to fit every budget and lifestyle. She is dedicated to making the home-buying and selling experience easy, enjoyable, and satisfying.

“I am so excited to be part of the Marron Gildea & Donohue family,” said Bremer.  “I’ve heard so much about the training that agents receive here and about the lead distribution system. I know I will benefit greatly from both.”  Bremer says she is really looking forward to “ringing the bell” which refers to the ritual within the office of having agents ring a giant bell to let everyone in the office know that another successful deal has been closed. 

Prior to joining the real estate industry, Christine worked in advertising for over 15 years. She began her professional career planning multi-million dollar campaigns for Procter & Gamble.  As a marketer for media companies such as TimeWarner/Time Inc., McGraw-Hill, and NewsCorporation, she gained expertise in sales development, marketing, branding, strategic positioning, and market research. Her contributions to the generation of significant sales revenues at Time Inc. led to three promotions in a five-year period as well as participation in the corporate leadership training program. Christine’s past experience translates into benefits for her clients. For buyers, her background in monitoring and analyzing competitive data enables her to provide them with helpful insights regarding market trends. For sellers, her proficiency in developing sales strategies and her knowledge of both traditional and digital advertising will differentiate their properties in innovative and effective ways.

Christine received her Bachelor of Arts degree in Art History from Cornell University and her MBA in Marketing from New York University. After living in Manhattan for nearly a decade, Christine was drawn to the outstanding quality of life in Bergen County, where her husband, Mark Lipson, was raised. They live in Glen Rock, where they enjoy the strong sense of community and the variety of activities.

Marron Gildea & Donohue is a full-service real estate firm with offices in Ridgewood, Saddle River and Ho Ho Kus. For current information on the local real estate market contact Christine Bremer at 201.445.8880.  If you are interested in learning more about a career at Marron Gildea & Donohue please contact Aloysius Donohue at 201.445.8880.