Q: My male friend would like to buy me a home and pay cash for it.

I would like to know how to move forward with this type of transaction, the tax liabilities he or I may owe, and how I can go about minimizing them.

A: If your friend wants to buy a home and then give it to you, then he will assume any gift taxes that are owed. While no tax may be owed now, he may have to file a gift letter with the IRS.

If your friend wants to give you the home over a period of years, at a rate of $12,000 worth of value per year (which is the amount anyone can give anyone without incurring the wrath of the IRS), then he may wish to buy the house, set up a trust and name you the beneficiary of the trust.

Ownership of the property can transfer to you over a period of years. For example, if the property is worth $120,000, and the property is gifted to you in $12,000 increments, you’ll own it outright in 10 years.

You and your friend may be able to buy the property together, where you each own 50 percent of the property. Then, over a period of years, your friend can gift his share of the property to you, again in $12,000 increments.

You and your friend should talk to a real estate attorney or an estate attorney about various options you have when it comes to buying this house. Some of your options can get complicated, particularly if you have a mortgage on the home that is purchased.

Feb. 15, 2006.