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Although mortgage interest rates are low, credit is still tight and many young families are finding it tough to buy their own homes. While parents and older family members may want to help, they need to do it in a fashion that doesn’t adversely affect them tax-wise. Here are some solutions:

Cash gift – starting this year, you can give $14,000 in cash every year to anyone you want and married couples can give double that, all tax-free. So if you have a married daughter with two children, you could, as a couple, give them up to $112,000 in cash tax-free.

Pay the mortgage — paying off your child’s mortgage is an option as well. The value of your gift is calculated as the unpaid principal plus accrued interest.

Make a loan – you still have to abide by IRS rules for interest on a family loan, but you can provide a much better rate than the bank. You must charge a minimum interest rate that is set every month by the Treasury – in March 2013, the rate for a long-term loan is a low 2.66 percent.

Buy a house – you can use your annual exclusion and lifetime exemption to purchase a home for a child, and transfer partial interests in the house over time for more tax-saving benefits.

Free rent – you can let someone live in your home or buy a house and let them live rent-free if the fair market value of the rent comes within the annual exclusion rate.

The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.