My aging parents can no longer take care of their home and we are buying a larger house to accommodate them moving in with us. We could financially handle the whole cost but they have agreed to pay 25% of the purchase price. The 25% equals $280K. We will be providing 40% and financing the remaining 35%. This is too large for a gift deduction. It is a payment for the additional cost associated with them moving into our house so can we just write out an agreement that this $280K is to cover the additional expense that is incurred by their requirements? They will not be on the deed.
One draw back I hope never happens with your family, I had notice when my significant other had put a hefty down payment on his daughter's and son-in-law's first home is now he thinks he has a say on whatever they want to do with their house. Ouch, a lot of unnecessary fights and bickering.
You are correct about the gift being too large and therefore taxable. Talk to your CPA before you do this. Sounds like a bad idea unless they are 25% on the deed. Ask the lawyer to make it a TOD inheritance. Just my opinion.