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Survey: Sandwich Generation Unaware of IRS Tax Laws When Gifting or Lending Money to Others


July 9, 2012 - BOSTON, MA

As generous Baby Boomers continue to provide financial support to family members during the current financial crisis, many are unaware of the complex tax laws regulating such transactions, according to the results of an online survey conducted between June 20 - 22, 2012 by Harris Interactive® on behalf of National Family Mortgage, the leading US service provider for home loans between relatives.

Several other recent, highly publicized surveys have reported that US Baby Boomers are providing significant financial support to both their adult children and aging parents. While financial experts have expressed concern over Boomers sacrificing their own retirement needs in order to help relatives, unsuspecting Boomers may also be inviting IRS tax troubles as a result of this good will.

In addition to these concerns, the IRS has launched a nationwide compliance initiative to investigate taxpayers who have transferred real estate to relatives for little or no consideration. As aging Americans seek to down-size their homes, while their adult children struggle to meet the banking industry's rigid home loan standards, intrafamily transfers of real estate appear to have grown in popularity.

National Family Mortgage's survey results expose a widespread unfamiliarity among Boomers with the IRS tax consequences of providing intrafamily financial support in the form of both loans and gifts.

Survey highlights include:

Loans to Family Members

  • Sixty-four percent of Americans ages forty-five and above are "not at all familiar" with a lender's obligation to report earned interest income from certain loans to others, even if no interest is paid, at a rate equal to the appropriate IRS Applicable Federal Rate in effect at the time the loan was issued.

Financial Gifts to Family Members

  • Forty-six percent of Americans ages forty-five to fifty-four are "not at all familiar" with the IRS annual gift tax exclusion (currently, $13,000 per person). Thirty percent of Americans ages fifty-five and above are also "not at all familiar" with this IRS regulation.

"Intrafamily loans and financial gifts with relatives can be a win-win for both sides, but absolutely must be structured and documented properly to prevent misunderstandings with the IRS," said Timothy Burke, National Family Mortgage's CEO and Founder. "Anyone considering a loan or a financial gift with a relative or friend should first consult with their preferred tax professional, financial planner, or attorney, to ensure the transaction is a successful one."

About National Family Mortgage
National Family Mortgage is an online peer-to-peer lending company committed to offering consumers alternatives to traditional and costlier forms of home financing. National Family Mortgage has developed a safe and easy way for families to structure real estate loans with their relatives -- thereby helping people arrange affordable loans, while reducing tax issues, protecting relationships, and keeping money in the family. National Family Mortgage has originated over $40 million in loan volume since inception, while keeping over $20 million in interest within families. With interest rates that are typically lower than rates charged by a bank, National Family Mortgage allows consumers to take major steps toward achieving their dreams with help from family, while saving thousands of dollars.

Survey Methodology
This survey was conducted online within the United States between June 20-22, 2012 among 1,897 adults (aged 25 and over) by Harris Interactive® on behalf of National Family Mortgage via its Quick Query omnibus product. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents' propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with non-response, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words "margin of error" as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in the Harris Interactive panel, no estimates of theoretical sampling error can be calculated.

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National Family Mortgage Press Contact:
Jeanne Kleinberg
781.269.5478
Email Contact
Twitter: http://www.twitter.com/FamilyMortgage

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