Kids decide to buy a home. They ask mom to invest a large sum of money in the home in exchange for a percentage tenancy in common interest in the home. They agree to be wholly responsible for the loan, but mom of course agrees to pledge her 1/2 interest in the property to lender. Lender rather than being happy that they only have to lend a lesser percentage of the purchase price and acknowledging the investment status of mom, asks mom to write a gift letter. That’s right a gift letter stating that she has made a gift under oath. Now the tax lawyer in me says, “Whoa an investment in property in exchange for a percentage interest is not a gift.” But lender explains that certain governmentally supported lending agencies have “unwritten” rules that say that these types of transactions are treated as “gifts” for their paperwork purposes. So, I ask can I write a gift letter that basically says given that Lender is using the following definition of the word “gift” then Mom is making a gift. The answer back is of course “no”. Then tax lawyer asks will lender indemnify mom against any gift taxes that might be assessed by reason of having to sign this non-gift letter gift letter. The answer back is “no”. I find it interesting that a government back lender is requiring people to perjure themselves to effectuate a transaction that makes their loan more secure and is not a gift for gift tax purposes. Welcome to America.