In the Wall Street Journal, Laura Saunders refreshes well-traveled techniques for intergenerational wealth transfers beyond the ultrawealthy. Many of these involve helping younger generations buy homes. Saunders’ advice is timely, as conventional home mortgage rates hit a three-year high. (October’s AFR isn’t exactly channelling the Obama years, either, but gifts and itemized deductions may reduce some of § 7872’s sting.)
Saunders emphasizes that these techniques work best when family members “trust each other enough to cooperate on shared goals, especially financial ones.” There’s a tricky balance between documentary rigor and appropriate contingency. Happy families’ tax-relevant facts may all look similar, while unhappy families may yield a Socratic dialogue of uncomfortable facts—especially if relationships change over time.
Links and excerpts, below the fold.
Laura Saunders, How Families Can Beat 7% Mortgage Rates and Lower Their Tax Bills, Wall St. J. (Oct. 8, 2026):
It is perfectly legal for families to lend money to a relative for a down payment or even a private mortgage.
But it is important not to cut corners, says Ryan McKeown, a CPA with Wealth Enhancement Group in Minnesota. If the loan is for a down payment, be honest with the mortgage provider and have a formal agreement. The lender owes tax on the interest payments received. . . .
If you’re going this route, McKeown advises against having a fixed plan to forgive the debt. Instead, do it in one-off letters specifying the amount—and keep careful records. Otherwise the IRS might try to treat the loan as a taxable gift.
Related TaxProf Blog coverage:
- WSJ: Red States Are Racing to Roll Back Property Taxes (Sept. 5, 2026)
- Newton: Tenure Mismatch Theory: Rethinking Federal Housing Subsidies Through Property Law (Apr. 12, 2026)
- Cahill: Home Sweet Home Deduction (Jan. 7, 2026)
- SSRN Review & Roundup: Elkins Reviews Reis’s The Gift Tax Treatment of Loan Guarantees (June 14, 2024)
- The Racial Wealth Gap and the Tax Benefits of Homeownership (Jan. 11, 2023)
- Osofsky & Thomas: Implicit Legislative Bias: The Case of the Mortgage Interest Deduction (June 20, 2022)
