Tax

Ask a Tax Question, Get an Answer ASAP!

Have your own Tax question?

Tax Professionals are Online Now

characters left:

Not a Tax Question?

Question

My brother is a foreigner, he does not live in US. He saved some money, he wants to buy a house here in US. He wants to put my name on the house (I'm a US citizen, fully employed), but he will pay cash when deal is closed, so we do not need any loans. I would like to know will this cause me any tax troubles?

Submitted: 63 days and 13 hours ago.

Category: Tax

Value: $15

Status: CLOSED

Country/State/Province of question: USA/CA

Already Tried:
find out if it has any tax issues to my brother, find out if it has any tax issues to me. so far was not able to get any answer.

Posted by Anne 63 days and 13 hours ago.

Answer

Hi XXXXXXXXXXXX

If what you are describing is being treated as a "gift" to you, then you must report any amount above $10,000 that you receive from any foreign source, but there is no US tax due for either yourself or your brother. You would report the receipt of this gift on
Form 3520Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts

Instructions for Form 3520

Under the US tax code, the giver of the gift, not the receiver, is the person who pays the tax on the gift. Since your brother is not a US citizen or a Resident Alien, he nis not subject to US taxation on gifts or any other foreign income he has.

If you were not planning on handling this as a "gift", then please let me know so that I may give you correct information, but if you handle this as a gift, it will keep both you and your brother from having to pay US tax.(You will still have to report receiving the gift on Form 3520 as mentioned above, but no actual tax will be due.)

I hope this helps.

Edited by Anne on 9/19/2009 at 7:42 PM

Posted by Anne 63 days and 11 hours ago.

Answer

XXXXXXXXXXXX

I regret that I gave you some wrong information. I did not put enough "0"'s in my answer.Form 3520 needs to be filed if you receive gifts of more than $100,000, not $10,000 as I originally wrote. The rest of the answer is correct. Please forgive me for not adding that additional "0".

63 days and 6 hours ago.

Reply

Hi,

Thanks for the quick reply, the house is not a gift to me. My brother is worried he is not US citizen or resident, so use his name to buy the house may not be easy (tax issues? legal issues?), so he want to use my name, and if later he decided to move to US, we can add his name to it. Or if later he decided to sell it, it maybe also easier if it is under my name. Will his this intent cause me or him any tax issues?

Thank you.

Accepted Answer

Hi again

Although it is a little unusual for an individual to pay cash up front for a home, especially in today's economic crunch, there is certainly no law against doing so, nor is there any tax consequences to you for doing so. As the owner of record you may deduct the home mortgage interest and real estate taxes on your Form 1040 (Schedule A)Itemized Deductions

The reason I suggested that you treat this as a gift is because anytime there is a transaction (money wired to an account, cash purchase of a car, home, etc) that exceeds $10,000, the bank/realtor/car salesman, etc is required to report this to the IRS.

This is no way means that the IRS will contact you, ask where you received the money, and try to trace it. It only means that this transaction will be reported to them.

Again, since your brother is not a US citizen or Resident Alien, he should have no US tax consequences for this transaction, as long as none of his income is US sourced (such as US investments in stocks, bonds, etc.) If he is intent in purchasing the home was to use it as rental property, then once he begins receiving rental income, then he may need to file a Form 1040NR U.S. Nonresident Alien Income Tax Return in the future, but that would not need to be filed until he is actually collecting rent.

In rare instances the IRS does follow up by sending a letter asking where the money came from. If that should happen, you will need to explain the circumstances of where the money came from. (You could call it either a gift or a loan from a family member)

I hope this helps clarify this situation for you.

Edited by Anne on 9/20/2009 at 4:46 PM

Accepts:
Expert:	Anne
Pos. Feedback:	100.0 %
Answered:	9/20/2009

Master Tax Preparer

Enrolled Agent with 20 Years Experience specializing Individual and Small Businesses

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Tax

Have your own Tax question?

Related Tax Topics:

Question

Optional Information

Country/State/Province of question: USA/CA

Already Tried:
find out if it has any tax issues to my brother, find out if it has any tax issues to me. so far was not able to get any answer.

Answer

Answer

XXXXXXXXXXXX

I regret that I gave you some wrong information. I did not put enough "0"'s in my answer.Form 3520 needs to be filed if you receive gifts of more than $100,000, not $10,000 as I originally wrote. The rest of the answer is correct. Please forgive me for not adding that additional "0".

Reply

Accepted Answer

Tax

Have your own Tax question?

Related Tax Topics:

Question

Optional Information

Country/State/Province of question: USA/CA Already Tried: find out if it has any tax issues to my brother, find out if it has any tax issues to me. so far was not able to get any answer.

Answer

Answer

XXXXXXXXXXXXI regret that I gave you some wrong information. I did not put enough "0"'s in my answer.Form 3520 needs to be filed if you receive gifts of more than $100,000, not $10,000 as I originally wrote. The rest of the answer is correct. Please forgive me for not adding that additional "0".

Reply

Accepted Answer

Related Tax Questions

Country/State/Province of question: USA/CA

Already Tried:
find out if it has any tax issues to my brother, find out if it has any tax issues to me. so far was not able to get any answer.

XXXXXXXXXXXX

I regret that I gave you some wrong information. I did not put enough "0"'s in my answer.Form 3520 needs to be filed if you receive gifts of more than $100,000, not $10,000 as I originally wrote. The rest of the answer is correct. Please forgive me for not adding that additional "0".