Document background
A Down Payment Gift Letter is essential documentation when someone receives monetary assistance from a family member or other donor to make a down payment on a property in South Africa. This document is typically required by mortgage lenders and financial institutions to verify the source of funds and confirm that the money does not need to be repaid. The letter must comply with South African regulations, including the Financial Intelligence Centre Act (FICA) for anti-money laundering purposes and the Income Tax Act for potential donations tax implications. It serves multiple purposes: protecting the lender by confirming the down payment isn't an additional loan, providing clear documentation for tax purposes, and ensuring transparency in the property transaction process. The letter should be prepared before the mortgage application process and must include specific declarations about the gift's unconditional nature.
