Will I owe taxes on down-payment gift money?

Receiving gift money for a down payment does not create taxable income for the recipient under federal tax law, since a gift is not treated as earned or reportable income to whoever receives it. Lenders will typically require a signed gift letter confirming the funds are a genuine gift and not a loan that needs to be repaid, as part of the mortgage underwriting file. The person giving the gift may have a separate federal gift tax filing obligation depending on the amount, which is a question for their own tax preparer. A lender or CPA can walk a buyer through the paperwork needed for a specific gift amount.