My mother lent my husband & me $200K to close on our new house, but our mortgage broker made her sign a letter declaring the $200K a "gift," since he was concerned that our home loan wouldn't be approved otherwise.
Three weeks later, we repaid the $200, from the proceeds of the sale of our old home. Do we have to report this exchange to the IRS? --i.e. not have to declare each $200K as gifts?
In a perfect world, I'd look at the facts, and say that you were gifted 3 weeks interest by your mom. A bit less than $500, with no consequences.
Your broker should lose his license. He counseled you (or your mother) to make a fraudulent statement.
A true gift would require a Form 709 to declare the gift, and use up part of the lifetime transfer amount, the $5.25M estate tax exclusion. A loan simply requires proper documentation, and interest declared by both parties. Mom would need to claim as income, and if she had lien on your house you get a deduction.
I wrote an article on The Step Transaction Doctrine, in which I describe how the IRS can collapse/combine multiple transactions and simply consider the results. I believe this applies to your situation.
(Note - Since posting this answer, I've passed the exam to sell real estate in my state. We are advised never to offer mortgage advice, that's what the banks are for. As I wrote, the broker risks his license for his advice.)
