IRS to strip down-payment gift programs of tax-exempt status

Agency aims to stop 'circular-financing' schemes

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Organizations that provide seller-funded down-payment assistance to home buyers do not qualify as tax-exempt charities, the Internal Revenue Service said in a ruling Thursday.

Down-payment-assistance programs, such as those at Nehemiah Corp. and AmeriDream, provide cash assistance to home buyers who cannot afford to make the minimum down payment or pay the closing costs involved in obtaining a mortgage.