Board Advice . Please Help. Do I have a shot?

Not a chance in hell.

Even if the board overlooks the "gift", even without a mortgage, you will have blown your entire wad with virtually zero savings left over.

What happens, then, if and when you lose your finance job (which now are viewed by most boards as among the riskiest jobs)?

The board doesn't care that you are single.
Sometimes they don't like young single guys if you give them the impression that you are an overgrown frat boy party animal.

The boards don't usually like the gift set-up.

new2this

Why don't you have your family write a letter that they are gifting you the money and then settle this gift/loan stuff later with them. also you can put one of your parents or both on the apartment. This way they are not even gifting but buying for you and themselves. This is just my opinion.

some boards don't like that either, bela.

Bela, most co-ops do not agree to guarantors.

matt why wouldn't coop allow copurchase b/w parent and child?

Our board has, and would, allow this arrangement. Many boards will consider this type of arrangement, unless you are shopping on Park, 5th, or CPW. Only thing that may hurt is that you will have no emergency cash on hand following the close. Boards typically want to see at least 1 year's carrying costs in liquid accounts following the close. My advice would be to carry a small mortgage (i.e. $200K), that way you take advantage of the mortgage deduction benefit, and have a $200K emergency fund.

new2this

it all depends on the co-op. Some will allow for gifting, even if it is 1/2 the purchase price. Some will not allow gifting whatsoever. Some will allow for guarantors and some will allow for co-purchasing. Get yourself a knowledgeable broker who knows which buildings to avoid and which would work in your scenario. If you prefer not working with a broker, be upfront about your purchasing scenario with the listing broker before making an appointment. Nothing worse than seeing a property you love and then finding out you can't purchase in that building...

However, as Matt stated, be careful about your post-closing liquidity. You want to have about two years worth of maintenance payments (and mortgage if financing) in liquid assets AFTER you close. You also want to have a debt-to-income ratio no higher than 25% (28% in certain co-ops), which does not sound as if it would be a problem if you are not financing. Also keep in mind that co-op board will look at BASE salary - so if $150,000 of your salary is bonus and commissions, and your base is only $50,000, that may be a problem. This could be overlooked if you can document several years of consistent bonus/commission.

otnyc
I think if he will put down 400K and then parents will gift him 600, he should be fine. Do you agree? or do you parents should go on deed?

Couldn't new2this take out a mortgage of a certain size that would satisfy the coop board's liquidity concerns and just pay the mortgage down/off as new2this saw fit post closing?

Matt, if he loses his job, all he's on the hook for is maintenance because he'll have no loan to pay off. Even if that's $2k a month, that's presently less than two days' pay for him. All he has to do is live like a monk for one or two more months, and he'll have a year's maintenance in cash in the bank.

Incidentally, New2this, I did the "spend your whole wad" thing when buying my condo in Tokyo, where I live now. My savings dropped from the equivalent of $130k to the equivalent of $480.00 until I got paid the next month. It was a very strange feeling having literally 99.5% of my wealth concentrated in one spot. But everything worked out just fine. I'm a little disappointed to see that a situation like this would be highly irregular with a NYC co-op board.

"I think if he will put down 400K and then parents will gift him 600, he should be fine. Do you agree? or do you parents should go on deed?"

There's no "deed" in a co-op purchase.

I think he should use $275K of his savings, take a mortgage of $200K and have his parents gift him $500K.
Preserves some reserves, takes advantage of some deductions and low interest rates.
Mets79 and Matt- are right on with how the Board will evaluate your income and profession.

most coop will welcome such a riskless transaction, trust your common sense, don't listen to the crook!

Depending on the building, it could be done, but you will need a bulletproof package to make it work.

ali r.
DG Neary Realty

Why not just put $200K of your own money down and keep the $300K in the bank. After closing if you want to pay off your mortgage, have at it.

I dont see what the big deal would be to about 75% of the coops out there, but with parents giving $600k and keeping 100K in the bank will be the difference.

With no mortgage assuming your maintenance will be $1500 a month tops on an apartment this size, that's 18K a year. And since your a big saver I bet there is no credit card debt.

I agree unless it is a Fifth Avenue - CPW Co op, I can't imagine a problem, if the rest of the package is good.

May I ask is it your desire to have no mortgage? Would you be ok, to get a loan for 50% ?

If so, I agree that 75% of co ops would be fine with:
50% down loan (it means the bank qualified you, which co ops prefer to all cash).
$500,000 in the bank for reserves, which down the track you could reduce or pay off your mortgage, or give back to your parents (with the understanding that if you ever needed it they would be able to regift it or part of it.)
.
If the board needed more reassurance you could also offer $25,000 to sit in the building lawyers account, to cover you for 12 months maintenance, so you are always 12 months paid in full. (however I don't think this would be necessary.)

Good luck
Gabrielle

Most coops, even if they do not have hard and fast rules, need to see 25-40% of purchase price liquid after down payment. Your family could gift the entire down payment while you finance the balance. Given that you are a finance guy you could see the obvious folly of failing to avail yourself of today's amazing mortgage rates. This leaves you with the necessary cushion that is required by the coop but will also leave you sleeping well at night knowing that your 1/2M is out making money as opposed to locked in the black hole of residential re.

where could I aquire a family such as yours?

Funny falcogold1

Ditto to falco. Why not take virtually zero % interest rates? You work in finance? ;) The only people who can borrow are the wealthy....take advantage.

Also, as kylewest has pointed out, there's nothing stopping you from immediately paying of the mortgage after closing if that's really the route you want to go.

Sorry, but you cannot afford a co-op for 975,000 if your net worth is $500,000.

As for your family gifting idea, there are gift taxes to be paid on such gifts. Co-ops do not like multiple owners or involved financial parties for the simple reason that it is potentially more complicated, and they prefer to keep things as easy as possible.

You might be able to buy a condo for that price, but for a co-op you should lower your budget.

Target, that is not correct. There is not gift tax. His family can give him gifts up to the federal estate exemption (currently its what? $5MM $2MM? No one is giving me such gifts lately so I'm not sure) tax free too all. There is some IRS reporting requirements, but no tax I believe. But the giver has to count the gift in excess of $13,000/yr (or something like that) against his/her lifetime estate exemption.

Reporting yes, tax no. kylewest, you are 100% correct. The current exemption is $5 million, and anything over the $13,000/year allowable gift counts against his/her lifetime exemption. Reporting is required, but there is no tax.

In other words, anyone may give $13,000/yr to anyone else, tax-free, without having this amount "chip away" at the estate exemption. Currently the exemption is $5 million, which expires at the end of this year. As to what the legislature will do next year, that's anybody's guess.

Sorry, didn't finish. OP, as long as your family has not used up that $5 million exemption, they may gift you (and your siblings, *in total*) up to $5 million, this year, without tax consequences.

Meaning, of course, there IS tax on the "gift" that's in excess of $13,000 in any given year.

The parents cannot give the kid half a million in a chunk with no tax liability.

Yes they can its called a lifetime exemption. as Isle of Lucy mentioned.

If they surpass the lifetime exemption limit then yes there is tax consequences

What tax liability is there?

"Meaning, of course, there IS tax on the "gift" that's in excess of $13,000 in any given year."

No, there IS NO tax on the gift, as long as it is done by the end of 2012. The tax laws may change in 2013, but right now, there IS NO tax on gifts up to $5 million.

"The parents cannot give the kid half a million in a chunk with no tax liability."

Yes they can. The can give up to $5 million, this year, with no tax liability, as long as they haven't taken advantage of the exemption in years past.

http://www.forbes.com/sites/robclarfeld/2012/02/14/tax-free-gifting-during-2012-a-great-deal/

Matt, how'd you do at reading comprehension tests? Isle and I could not have laid this out much more clearly or simply. How do you glean from what we wrote that there is a taxable moment here?

I'm not buying it.

Well a lot of estates are buying it and planning large gifts before the expiration at the end of this year.

hey were'd he go?

http://www.irs.gov/pub/irs-pdf/p950.pdf

Happy reading. Also, the basic exclusion amount is $5,120,000 for 2012 -- it's inflation adjusted from 2011.

^ flarf, I didn't want to pile on comprehension-challenged. That there is tough math. :)

you have a better chance if you take out a mortgage for some of the purchase, & get gift letter from parents, you can always pay off the mortgage early if you want to. Or avoid all this and buy a condo

"Or avoid all this and buy a condo"
Done.

Or buy within his means.

Matt, you hang around, and even live with, unemployed deadbeats who don't take responsibility for their own lousy job prospects and can't qualify for a rental. How can you judge someone else's means?

Huntersburg, suck it.

How about just saying you're sorry for giving incorrect advice on the tax implications of a gift?

Matt, is there really anything to even suck?

By the way, is this no longer the case:

https://streeteasy.com/nyc/talk/discussion/26026
NYCMatt
about 13 months ago
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I love you Huntersburg!

"How about just saying you're sorry for giving incorrect advice on the tax implications of a gift?"

I'm not convinced it was inaccurate.

And you have no basis to conclude you are accurate either. But I guess, if it comes out of your ass, it must smell good to you.

Seriously Matt? They gave you the IRS publication. Do you not enjoy facts?

just sayin, many older parents convert all of their accounts to joint with a child, for convenience, the kids may not even know about this. stays in parents soc sec number. the banks and brokerages don't care and don't report. the irs does not go looking for such cases in an attempt to obtain an immediate gift tax. that being said, when the parent dies, that money should be included in their taxable estate. but not until then is tax payable. that's just empirically what happens.
Furthermore, it is possible to maybe break the law and not include it???? I would not suggest it.i wouldn't even consider it. . just speculating here. i am not a lawyer. but i do know that many convert all of their acccounts to joint with a child or whoever, and there are no consequences at that time. even though, theoretically, at the moment the accounts were made joint, it was a constuctive gift. hey, i dont' even know what that means, but i know that i am right. NOT A LAWYER NOT AN ACCOUNTANT. just include it in estate at death, and you are cool...Of course estate tax limiot varies with time, sometimes it makes sense to time your death before the end of the year.

i'm confused. is the general consensus on all the boards that NYCMatt is a serious poster? Isn't it clear that his posts are all sarcastic? If they are not sarcastic, then clearly the unfortunate guy is extremely uneducated (I hope this is not the case) or the laziest guy ever.

Either way, why bother trying to convert this guy into understanding anything?

he is riversider's cousin.

hey columbiacounty, how were the deer the other week? Did you get lucky?

i was just thinking. why don't you just buy the apartment with the rich relative and later when you repay them you can have their name removed from the apartment

Intriguing. We have deceit, all we need is murder...

You could buy my apartment! My board would be okay with that deal.

6 days of discussion later -- and we have a reverse offer from abcdefg!
new2this can e-mail you for info.