Dawna Davies and her assistant Jodi Blanchard did an exceptional job in helping us sell our home in San Luis Obispo. Dawna’s intelligence and knowledge of the business made the whole complex process easy for us to understand and navigate. What seemed like counter-intuitive advice at the start—that we should be extremely thorough in discovering any possible problems with the forty year old house and present them in advance—turned out to streamline the final transaction by building trust in potential buyers and removing the possibility of unpleasant surprises and uncertainty for us. Her contacts with a wide range of local business people who carried out many preparatory operations quickly and economically offered another unique benefit. Her tact and amiability made our numerous interactions pleasant rather than wary. And Jodi’s work in converting the box full of documents from our files into a coherent house-maintenance-history binder meticulous and creative. From start to finish our involvement with Davies Company was personally as well as financially rewarding.
- Keep agreements simple- All agreements should be easy to explain to outside parties (other children, family members, legal advisors, tax advisors, etc.) Have all agreements in writing, this avoids conflicts over assumptions and expectations.
- Know the benefits to all parties- Over 33% of first-time homebuyer purchases involve gift/loan funds, according to a recent CAR Homebuyer Survey. This is an increasingly common way of transferring wealth or advance inheritance to the next generation. It can make the purchase much easier for the buyer, lowering interest rates and monthly expense because of to a higher down payment.
- Determine how to contribute- Per IRS.gov, there is a maximum amount each individual can gift to another person annually. This can be significant amount towards a purchase. For example, if two parents each made gifts to their child and partner, this could be a substantial gift towards a downpayment. Of course, gifts can be larger, but may have tax consequences. Consult your tax advisor for more information.
- Decide if you want to be in a partnership- If you are a joint owner or lender to your children, you are in a form of a partnership with your child. It may be more beneficial for all parties to keep interests separate by gifting.
- Review your own estate plan- See your financial planner, CPA, and estate planning attorney for advice on how you can contribute and to determine if it’s feasible with your current personal financial plan and needs.