If you’re thinking of helping a relative or a friend purchase a Santa Fe Home this is a must read.

Q.     A relative needed help with the down payment on a home, so I gave him $25,000. I signed a gift letter to the lender. Shortly after the home closed, a different relative paid me back the $25,000. Should I still consider the money I gave him as a gift? Should I file a 709 gift tax form?

–California

A.      This is a tricky situation. Given the circumstances, I suggest that you talk to an estate planning attorney—though it would have been better if you’d done that before you got involved in this transaction.

The gift letter that you signed undoubtedly had wording to the effect that you did not expect repayment and that the recipient was under no obligation to you. Presumably, you also had to provide other documentation, such as bank statements, that showed that you had the money and didn’t have any unexplained large deposits before the gift was made.

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