Since this is the United States here are some numbers.
In 2020 the annual limit before having to account for the gift on your parent's tax return is $15,000 per person.
My parent, a sibling and I are buying a home together. My sibling and
I will pay the mortgage loan, and my parent will provide the down
payment. All three of us will be on the title, but since my parent
will not be on the loan, the transaction is technically a gift.
The parents presence on the loan is not material for the gift tax issue. The first thing to know is are they a part owner. Even though the house might not be sold for years or even decades nailing down the ownership percentages now and having it reflected correctly on paper will be helpful in ways besides the current tax question.
If they are a part owner, then the amount of the down payment doesn't matter, as long as their ownership percentage isn't far removed from their percentage of the entire transaction.
If they aren't going to be a partial owner then they can give $15,000 in 2020 to you, and $15,000 to your sibling without having to file any related tax forms with the IRS. If your parent is married then their spouse can do the same thing. Which means that either $30,000 or $60,000 can be for the gift without tax issues.
If they want to contribute more than that they have a couple of options:
- Give you the gift now in 2020, and then give another gift in early 2021. The IRS hasn't released the numbers for 2021 yet but it is likely they will stay the same. They can't just promise you the money in 2020, they will have to give you the money this year, and then more money in January.
- File the tax form using some of their lifetime gift amount. They will not have to pay a gift tax now, and will only be relevant if their estate exceeds whatever the limits are in the future.
If the parent won't be on the loan documents the lender will want the parent to sign a form stating that the money is a gift. The lender wants to know if there is a secret agreement to pay the parent back. If it is a loan from parent to child the lender will need to consider the payback amount when determining if the borrowers can afford the loans.
If so, at what rate(s), considering my sibling and I are in two
separate income brackets?
If there is any gift tax to be paid then it would be paid by the parent, so you and your sibling's tax brackets don't factor into the calculation.