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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10149
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If the property is co-owned by father and son and the father

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If the property is co-owned by father and son and the father is a NRA and the son is a US national. What kind of tax implications are there when the deed is transferred just under the son's name. Thanks

Lane :

Hi,

Lane :

This would be a gift

Lane :

The value of the gift is the Fair Market Value of the father's interest in the property. ... And here in the US only the maker (Giver) of the gift is taxed under the gift tax rules

Lane :

Your BASIS in the property, should you decide to sell in the future (for capital gains purposes) will be the adjusted basis (original purchase price plus improvements)

Lane :

To be more specific, your basis is what is always has been and your basis in the gifted portion from your father will be HIS basis (carryover basis) ... so if you bought this property together, then your basis upon any future sale (which WOULD be a taxable event) is simply the purchase price plus any improvements

Lane :

Questions?

Lane :

Still with me?

Lane :

Looks like you're typing ... I'll wait

Customer:

are you saying to transfer to property to me from the joint structure, there will be no tax because it was a gift and the giver is a foreign national? That is what I want to know.

Lane :

Yes, transferring it to you is giving you a gift of his interest (ownership interest) which means that it IS NOT taxable to you ... If He were a US person HE would might have to pat the gift tax, but sine he is not, that is between he and his country of citizenship. Here in the US, neither one of you will have to pay any tax

Customer:

You are 100% sure on this? That's what I thought. but my accountant told me that it has to do with the type of the property. My accountant says if it was cash then 100% no gift tax but if the property is real property located in the US. It is subject to gift tax.

Lane :

That is not correct. Yes, I am sure Here's the tax citation you should take to him/her:


(a) General rule.--Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.


26 U.S.C.A. § 102 (West)

Customer:

he sent me this

Customer:

can you scroll to page 6

Lane :

The nature of the gift, whether it be cash, intangibles such as stock, real estate, etc., is not an issue. The VALUE of that gift is an issue

Lane :

DOes your father come under the expatriate regime?

Customer:

that is only about trusts right

Lane :

Only about trusts and gifts from foreign persons COMING in from outside the couontry

Lane :

THis is not a TAX form, but rather an informational form that IRS forwards to Dept of treasury for the purposes of tracking money movements (money laundering, etc)

Lane :

There will be no tax here UNLESS your father falls under the expatriate regime, where he has renounced his US citizenship

Customer:

ok sounds good

Customer:

thanks

Lane and other Tax Specialists are ready to help you


Thanks Peter,

Lane

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