Equity for Mortgage Lending

mortgage loan

It is always good when builders are able to use as much equity as possible. This happens very often in practice, but the money does not only come from your own savings. The majority of home builders and homebuyers are middle-aged and recently set up their own family. The savings are often manageable, a stately portion of the equity often comes from the parents.

The fact that parents provide their children with real estate acquisition properly financial support, is anything but unusual. From the point of view of the parents, the money is meaningfully invested, especially since their offspring is thereby relieved directly financially – and twice. Finally, a high level of equity reduces the need for leverage, and lending often improves, which in turn leads to a lower interest rate.


Parents only provide their money in the form of a loan

Parents only provide their money in the form of a loan

Mostly, however, it is given, which is all the more enjoyable for the budding homeowners. However, the joy can turn around quickly – at the latest when the tax office announces and wants to raise a gift tax.

This is exactly what few people expect, which simply has to do with ignorance. Neither the donors nor the recipients think of the emergence of a possible tax. As a result, a surprisingly high tax burden may threaten, which is why it makes sense first to inform and then to give. Ideally, it turns out that there is no tax. Should it emerge, solutions can be sought to prevent or at least reduce the onset of a tax burden.


The amount of the tax we can not give

tax credits

Exact information about the amount of the tax we can not give at this point unfortunately. Whether and to what extent the gift tax accrues depends on three factors, namely the amount, the date of the gift and, in particular, the existing relationship. This results in numerous combinations, which in turn result in very different tax rates. Especially when it comes to the donation of very large amounts, it may even be useful to first visit a tax expert.