A Guide to Gifting or Purchasing a Home on Behalf of Others

Buying a home is a significant financial step—and it’s not always for yourself. Whether helping your parents retire comfortably, giving your kids a head start, or surprising someone with the ultimate gift, purchasing a house for someone else is a generous (and complex) act.

But before you imagine turning over those shiny new keys, it’s essential to understand the legal and financial landscape that comes with this decision. Is it possible? Sure. But that doesn’t mean it’s always simple. Here’s your go-to guide for navigating this unique area of homeownership.

The Basics of Buying a House for Someone Else

Can you buy a house for someone else? Yes, you can absolutely buy a house for someone else. But here’s the catch—not all methods are created equal. Navigating the home buying process depends on how you want to structure the purchase.

Buying a house for yourself is complex enough. But doing it for someone else adds layers to the financial and legal picture.

Methods to Purchase

• Buying Outright and Gifting It: The most straightforward approach is to fully purchase the property and legally transfer ownership to the recipient. This works best for all-cash purchases. However, be mindful of gift tax rules! The IRS allows an annual gift exclusion of up to $19,000 per recipient (for 2025), but larger gifts require filing a gift tax return. Still, most people won’t hit this lifetime limit.
• Holding the Title in Your Name: Maintain property ownership while letting a loved one live there. It’s an option for buying homes for an elderly parent who needs care or children pursuing independence. However, you’ll remain financially responsible for taxes and maintenance. Whether you pay the mortgage depends on your agreement.
• Co-signing a Mortgage: We’ve encountered parents as co-signers on a loan for their adult child struggling to qualify for a mortgage. Co-signing a home loan is an option for anyone, family member or not. But beware—the risk is all yours if they fail to make timely payments. A second mortgage changes the buyer’s financial picture, too.
• Co-ownership: Purchase the property with a co-owner, such as a sibling or friend, and share ownership rights and responsibilities. This can be beneficial but requires careful legal agreements to protect both parties. 

While buying someone else a house is generous, challenges lurk behind each avenue. A few of the strings attached:

Gift Tax Implications

When gifting a property, the gifter may need to file an additional tax form with your income tax return if the value exceeds certain limits. The IRS has annual and lifetime gift tax limits. Additional planning is required to avoid hefty tax bills if the property’s value exceeds the annual gift tax exclusion. Given the size of a home purchase, the gifter may make a dent into their lifetime estate and gift tax exclusion set at $12.92 million per individual in 2025.

Transfer Implications

The states have varying laws on property transfers and rights of survivorship if the recorded owner passes away. Consult a real estate attorney to see if your gift of a house will indeed be in their name if something happens to you. If you face legal, personal, or financial issues down the road, the gifted house can’t be reclaimed unless you’ve taken precautions like creating legal agreements.

Financial and Property Taxes Implications

Don’t forget about financial risks, either. A gift can’t be returned if your financial picture changes. Co-signing a mortgage involves more risk if the primary borrower defaults. You’ll be legally responsible for the full mortgage payments if the borrower can’t make them, which could jeopardize your financial stability. Helping others is terrific, but no one wants to jeopardize their financial stability.

Property Taxes and Ownership

When you decide to buy a house for someone else, it matters whose name is on the property deed. Will it be in your name, the recipient’s name, or a combination? This decision has implications for property taxes. If the property is in your name, you’ll be responsible for the property taxes, which could affect your financial situation. 

On the other hand, if the property is in the recipient’s name, they will need to handle these taxes. Understanding the tax responsibilities associated with different ownership structures is crucial to avoid unexpected financial burdens.

Can Someone Buy Me a House?

Maybe you’re “on the other side”—waiting to see if someone can make this move for you. The good news is, yes, someone else can buy a house on your behalf, but legally, they’ll need specific arrangements in place.

Who Might Do This

Parents, close relatives, benefactors, or even charitable organizations (in specific cases) may step in. The arrangement often hinges on one critical factor: both parties’ financial and legal alignment.

For example, if you can’t qualify for a mortgage, a family member can buy the property to lease or gift it to you. Agreements like these should always involve clear terms to avoid confusion or disputes.

How They Buy a House For You

Gifting

It’s not uncommon for people to receive financial support for a home purchase. Most lenders allow gifted funds for down payments, but they require documentation, including a signed letter from the giver confirming the gift. It can’t be a sneaky loan where the gifter still expects you to pay them back.

However, lenders may impose restrictions if the entire home is gifted. Review your mortgage lender’s specific requirements surrounding gifts and ensure compliance to avoid hiccups in the loan approval process.

While it’s great to have support, relying on someone else to buy your home can come with risks. For instance, mixing finances with friends or family can impact relationships long-term.

Co-Signing

It gets tricky if a mortgage is involved or you’re co-signing a home loan. Co-signing helps some buyers afford a property in areas where they need more credit or buying power. Still, mortgage lenders want to ensure the named borrowers meet their financial criteria. You’ll likely need to provide documentation proving your income, creditworthiness, and more, even if someone else is purchasing.

When co-signing a mortgage with a relative, remember that both parties’ finances will be tied to the loan. Missed payments could negatively affect your credit. Co-signing a mortgage also means you share the legal responsibility for the loan, which can impact your credit if payments are missed.

Additionally, consider how the property will be owned:

Ownership Structures:

• Sole Ownership: They the property under their name and allow you to live there, possibly with a lease agreement where you cover maintenance costs and taxes.
• Joint Ownership: Purchase the property together and share ownership rights, including the taxes and maintenance.

Legal Responsibility Watch-Outs

If someone does buy a house for you but is the sole owner on the title, understand your responsibilities. Will you pay rent and handle maintenance? Are you co-signing a loan, but the deal is you pay the mortgage? What happens if you don’t?

There’s also the matter of equity. When you buy a home, that down payment, future mortgage payments, and market appreciation accumulate to grow wealth. When it’s time to sell the house, that equity is realized. Who will get the return on the investment–the initial purchaser, the new owner, or the person making the mortgage payments? It’s something to think about as you discuss buying a house for someone.

Make sure everyone’s roles and outcomes in the transaction are clearly defined to avoid misunderstandings.

Can Someone Buy An Investment Property on My Behalf?

Are you doing the financial legwork but can’t be there to close the deal? You can have someone buy the house on your behalf. The most common tool is a power of attorney (POA). This legal document allows someone to act on your behalf, such as signing agreements and making decisions during the purchase process. People use it when they’re unavailable to handle the details, such as abroad or have other extenuating circumstances.

Mortgage Options for Buying a House for Someone Else

Several mortgage options are available for financing the purchase. If the recipient is eligible, you might consider a conventional mortgage, an FHA loan, or even a VA loan. Each option has its own set of requirements and benefits. 

For instance, FHA loans are known for their lower down payment requirements, making them a good option if the recipient has limited financial means. VA loans offer benefits for veterans, including no down payment and no private mortgage insurance. 

Conventional loans may have a higher interest rate if this is a second home purchase for the buyer. These may be harder to qualify for, as they want more money upfront. But there are other ways to finance the purchase, such as a home equity loan. Researching and comparing the loan options is essential to find the best fit for your situation and the recipient’s needs.

Buying a Home For Someone Else

Buying a home for someone else is an incredible way to lend financial support, but it’s not without its complications. From navigating gift taxes to ensuring clear agreements between parties, every scenario calls for careful planning.

Helping loved ones is rewarding, but it’s equally important to protect your own financial well-being. Want more advice on navigating property purchases or tax implications? Stay informed—bookmark our blog and keep yourself updated!

FAQ

Can I buy a house for a family member?

Buying a house for a family member can be a wonderful way to provide them with stability and security. However, both sides must review the tax implications and potential risks involved. For example, if you gift the house to a family member, you may need to file a gift tax return if the value exceeds the annual exclusion limit. Additionally, mixing finances with family can sometimes lead to complications or misunderstandings. Have clear, written legal agreements between the buyer and the future owner. Iron out all the details to preserve your personal relationship for the long-term.

What are non-arm’s length transactions?

Most people buy their homes on the open market from a person they don’t know. But what if you’re buying or the house is a gift from Uncle Joe? A non-arm’s length transaction occurs when a property is sold or transferred between family members or related parties. These transactions are subject to specific rules and regulations, including tax implications and potential penalties. The Internal Revenue Service (IRS) closely scrutinizes these transactions to ensure they are conducted at fair market value. The transaction could incur additional tax liability if it is not at fair market value. Learn about these rules and work with a tax professional can help you navigate the complexities and avoid potential pitfalls.