[FL] [FL] How do I purchase my father’s home if I have bad credit?

Lexi, Chatbot

I understand that you're looking for guidance on purchasing your father's house. Have you already discussed this with your father?

Lexi, Chatbot

Are there any specific concerns or obstacles you anticipate facing during this process?

Lexi, Chatbot

Is there anything else the lawyer should know before I connect you? Rest assured they'll be able to help with your property purchase.

TJ, Esq.

Hello! My name is TJ and I’m an attorney. Thanks so much for the opportunity to assist you! I’ve gone over the details you shared and I’ll post my initial response shortly. I’ll also post a few quick questions. They’ll help me better understand your situation so I can give you a more complete and tailored answer.

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TJ, Esq.

To find an attorney for a real estate transaction like this, you've got a few good options. A solid starting point is your local county bar association's lawyer referral service. They often have lists of attorneys who specialize in real estate law and can point you to someone experienced with family transactions and gift of equity situations. Online legal directories like Avvo, Martindale-Hubbell, and FindLaw can also be helpful since they let you search by practice area and location, and you can often see reviews or attorney profiles.

Let's discuss this in more detail so I can provide a more thorough response.

What state is the property located in?

Have you already spoken with any mortgage lenders about your credit situation and the possibility of using a gift of equity?

TJ, Esq.

It sounds like since the mortgage brokers hit a wall with your credit, you're really focusing on finding a legal professional who can navigate this. A lawyer specializing in real estate and estate planning can explore creative solutions like the gift of equity, which might sidestep some of the traditional mortgage requirements by adjusting the sale price to reflect your father's gift.

This approach could potentially allow you to acquire the property while acknowledging your father's contribution without relying solely on your current credit standing for a full mortgage.

What state is this in?

TJ, Esq.

Since you're in Florida, there are definitely specific things to consider. A "gift of equity" is a legitimate way to transfer property, especially within families, and it means your father would sell you the house for less than its appraised market value. The difference between the appraised value and the sale price is essentially the gift. This can be a great way to handle the down payment, which is a major hurdle for you given your credit.

However, even with a gift of equity, you'll likely still need a mortgage for the remaining portion of the purchase price. The mortgage brokers weren't able to help because of your credit, which means a standard loan might not be an option right now. This is where an attorney's guidance becomes really important because they can look at alternative financing methods or creative structuring of the deal that doesn't rely solely on a traditional mortgage.

One thing that needs a close look is the tax implications for both you and your father. While Florida doesn't have a state gift tax, there are federal gift tax rules. (26 USC § 2503 (2023)) Your father has an annual exclusion amount (currently $19,000 per recipient for 2025) that he can gift without needing to file a gift tax return. If the gift of equity exceeds that annual exclusion, he'll need to file a gift tax return (IRS Form 709), although he probably won't owe any actual gift tax unless he's already used up his lifetime gift and estate tax exemption (which is quite high, over $13 million for 2025).

For you, the recipient, a gift of equity generally isn't considered taxable income at the time of the transfer, but it could affect your cost basis in the property, which matters if you ever sell it in the future for a gain.

Another key Florida-specific point is homestead protection. If this house is your father's homestead, there are specific rules about how it can be transferred, especially if he has a spouse or minor children. Also, the homestead exemption provides significant property tax benefits and creditor protection in Florida. Transferring ownership could affect these benefits, so it's important to understand how that plays out for both of you. You'd want to ensure that once you own it, you can apply for your own homestead exemption if you're going to live there as your primary residence.

A lawyer who specializes in real estate and possibly estate planning in Florida would be able to walk you through all these details. They'd review your father's current ownership, any existing mortgages, and help you structure a purchase agreement that clearly outlines the gift of equity. They can also coordinate with a CPA or other financial advisors to ensure all tax implications are handled correctly for both parties. Their role would be to make sure the entire process complies with Florida law and federal tax regulations, protecting both your interests.

Here's how I think you should proceed: you should immediately consult with a Florida real estate attorney who has experience with intra-family property transfers and gift of equity transactions. They can help you understand the specific legal and financial steps involved, draft the necessary documents (like a gift letter and purchase agreement), and advise on how to approach your father with a clear, professional plan. This strategy will provide you with solid information, help you manage any potential disagreements by having a clear legal framework, and ensure that the transfer is done correctly to avoid future problems.

Did I completely answer your question, or do you need clarification on anything I've discussed? Please feel free to ask any follow-up questions you might have!