Genesis Program

[bekzm]

Seller did the dp gift fund & fee of the Genesis program. Is is counted as a donation? Can't find a true answer to back it up. Any one else had it or done it as a donation?
Thanks

[erchess]

Speaking only for myself

I never heard of the Genesis Program nor of a "dp". I would love it if you would either explain in your own words how the program works or post a link to information about it. I would be willing to spend a few minutes learning about the program and then a few more offering an opinion about its charitable status or other tax consequences.

[erchess]

OK Found Genesis Program Online

Genesis Program is a 501(c)(3) organization that helps buyers buy homes. The buyer finds a home that they would like to buy and for which they are able to obtain a mortgage that accepts funds from a charity as down payment. You close the deal in the ordinary way and Genesis wires your down payment to the right people. It is a gift to you. You have to be working with a seller who is willing to work with the program because Genesis won't provide your down payment unless the seller has agreed to pay Genesis the down payment plus the lesser of $750 or 1% of the sales price. It beats me why a seller would not rather just pay the down payment for the buyer or reduce the sales price. It also beats me why Genesis is not a for profit company if this deal actually increases the numbers of homes that get sold and benefits sellers in terms of the prices homes command. I do see the benefit to the buyer.

Reading between the lines of OP I don't see how the seller has anything other than an expense of sale. When you give money to a charity you have a charitable donation only to the extent that you donated more than the FMV of whatever you got back. For example if the charity somehow became the owner of some property and you bought the property from the charity for only what you would have paid someone else for equivalent property then you don't have a charitable contribution. Genesis Program is claiming that they provide a service to the seller that is worth more than the cost to the seller.

Look at it this way. You have a tax business. I want $20 out of each of your tax return fees for the rest of tax season. You won't pay me that unless I am either going to increase the amount each client pays you by more than $20 each or unless you want more returns to do and I am going to cause that to happen. If I go "oh I know it's a money losing proposition for you but think of the widows and orphans you will be helping" you still won't buy my deal unless it makes economic sense but you might make a donation to help the widows and orphans and ask for nothing in return so that you would have a charitable deduction. Other people including sellers of homes operate the same way in terms of spending money to make money.

[HBurkholder]

http://www.ameridream.org/Newsroom/PressReleases/2005/Memorandum_%20%20Deductibility%20of

While this is refering to the ameridream program I believe the same principle applies. the contribution to the genisi program is considered a selling cost and is subtracted from the proceeds of the sale.

[HBurkholder]

It beats me why a seller would not rather just pay the down payment for the buyer or reduce the sales price. It also beats me why Genesis is not a for profit company if this deal actually increases the numbers of homes that get sold and benefits buyers in terms of the prices homes command. I do see the benefit to the buyer.
.

The Genesis program along with the Nehemiah and Ameridream programs are not allowed at this time. The reason for these programs is to allow buyers with little to no cash to be able to purchase homes. These programs work in conjunction with FHA financing which require 3% down. this money can be gifted from a family member or from one of the non-profit gifting programs. It cannot come directly from the seller as a contribution to the down payment.

Does it make any sense? No but how many government / loan regulations do make sense.

[bekzm]

Thanks for your help with Gensis

Thank you for all your response. And "erchess" - that is exactly the way I was reading it and knew about it - so nicely described - better than what I was reading about. And thanks to HBarkholder - missed reading that article - thanks again for all your great help. So nice to have friends when need an answer and tired and Sunday at that.
Really nice people on the message board - hang in there everyone.