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Background:

I live in Washington state, but was purchasing a home in California; for my mother to live in (rent-free).

I was tentatively planning to gift my brother and his wife $30,000 in equity of the home (approximately 4%). They will also be paying $30,000 (so would have a total of 8% equity). I don’t think this point matters, but that $30,000 was also a gift from a prior year.

My question:

Is there anything I need to do, to ensure that the above is treated as a gift? Should I gift them the cash first, so they’re the ones depositing it into escrow? Can I just deposit it into escrow on their behalf?

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  • Regardless of whether you give the money to them or put the money in escrow yourself, you'll need some paperwork indicating that they do, in fact, own part of the home. The title is only going to list yourself as the owner, and unless I am mistaken, just adding your brother and sister-in-law to the title wouldn't say anything about what share you each own, only that all three of you would need to agree to any future sale.
    – chepner
    Commented Jan 17, 2022 at 18:24
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    @chepner I believe it is possible to list a percentage owned by multiple people on a property title. My partner and I each own 50% of our Californian house.
    – mkennedy
    Commented Jan 17, 2022 at 19:27
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    @chepner if you don't explicitly list shares on the title then it's assumed to be equal shares. But nothing prevents you from listing something else.
    – littleadv
    Commented Jan 17, 2022 at 21:07

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You'll need to talk to a lawyer about this, but the ownership is on the transfer deed to the house. So the seller will sign a deed that says something like "To Andrew Jordane, 92% owner, and to Andrew's Brother and his wife, 8% owners as community property".

Anything that's not explicitly written on the deed may be an agreement between you and your brother, but wouldn't be binding to anyone else (including title insurance when you later decide to screw your brother and sell the house without telling him).

As to the gift part - you file form 709 that details what you gifted ($30K in cash + $30K in equity of this specific property).

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