<prompt> Human: My wife and I are looking to buy a new house and my mother decided that she would like to help us out with the down payment. What is the best way to do this? Should we accept the cash from her as a gift? Should my mother pay the down payment directly? If she does pay the down payment directly, does that count as income for my wife and I? Would it also mean that my mother would have to be on the deed to the house because its her money?Assistant: You should try doing a search of the sub since there are many posts like this, but simple answers: It does not count as income for you. Bank will make you and gift giver sign papers saying that the money is a gift not a loan. Bank may ask for bank statements from gift giver proving they had the money for X amount of time. Your mother does not go on the deed, just deposit the money into your bank account.Human: Thanks for the link and quick answers. Im a bit confused about how lifetime exemption works. If Im reading it correctly does it mean that if my wife and I take 40,000 from my mother for a down payment, then 26,000 will be deducted from her lifetime exemption, but shell still pay no tax on it?Assistant: Actually, mother would gift 14000 to your wife and 14000 to you without it affecting her lifetime exemption amount. That would mean shed only put 12000 on Form 709 to be deducted from her lifetime exemption. She wouldnt have to start paying tax until shes given away 5.45 million.Human: Ok. Got it. Now heres another question.. does it matter how the money is used in order for it to not count as income for my wife and I? For instance if we received 40,000 and put 30,000 as a down payment and used 10,000 to pay off miscellaneous debts or used it for furnishings or improvements for the house.  <response>: Gifts arent taxable income for you. It doesnt matter what use you put the money to. 