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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2030
Experience:  Certified Public Accountant
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I am a US tax payer. I already have a savings (GBP 220,000)

Customer Question

I am a US tax payer. I already have a savings (GBP 220,000) deposited in a UK Bank. I would like to give this sum to my son, who is a UK tax payer, so that he can use it as a down payment for his house purchase. What are the tax implications?
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: I have already reported this cash deposit in my 2015 tax return
Submitted: 9 months ago.
Category: Tax
Expert:  Mark Taylor replied 9 months ago.

Hi, my name is Mark. I will be happy to help you with your questions. Please give me a moment to prepare your response.

Customer: replied 9 months ago.
Thanks. Awaiting your response
Expert:  Mark Taylor replied 9 months ago.

If this amount is a gift you would need to prepare a gift tax return form 709. The taxable gift is any amount that is more than $14,000 given to an individual. The lifetime gift and estate exclusion is $5.45 million. So your taxable gift would go against this amount and reduce the $5.45 million.

Expert:  Mark Taylor replied 9 months ago.

There would be no tax on the gift as long as you have not previously made large gifts in the past that have exhausted your exclusion.

Customer: replied 9 months ago.
After filling in this Form 709 in my 2016 tax return, will this mean to pay any more tax, or it is just a record to be deducted from that $5.45 million?
Expert:  Mark Taylor replied 9 months ago.

It is just to keep track of a running total of your gifts during your lifetime. So there would be no taxes as long as the 5.45 million has not been exceeded. You of course would need to convert GBP to $USD

Expert:  Mark Taylor replied 9 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.

Customer: replied 9 months ago.
One last question. If I am registered as a part owner of this new house in the UK (50% mine, 50% my son's), would that provide me any tax relief in my US Tax as a home purchase?
Customer: replied 9 months ago.
In other words, should I report this in the tax deductions section as a new (partial) house purchase. Note that I will not be bearing any mortgage on this home buying.
Expert:  Mark Taylor replied 9 months ago.

You mentioned that you had an account with $220,000 GBP. Have you been filing FBAR' reports for disclosing the foreign account?

If you are 50% owner it sounds like the payment to your son was not a gift. The investment in the home would not result in any tax benefits. The only tax benefits would be if you paid mortgage interest and property taxes you could claim these as an itemized deduction for a second home.

Customer: replied 9 months ago.
I have reported this saving in FBAR reports. Based on what I heard from you, and if there is no tax benefits of keeping a 50% ownership, I would be reporting I as a gift. old you agree?
Customer: replied 9 months ago.
Would you agree?
Expert:  Mark Taylor replied 9 months ago.

If you have no ownership in the property it would be a gift. I agree.

Customer: replied 9 months ago.
In this case, I should not be registering myself as a partial owner there. Is this right
Expert:  Mark Taylor replied 9 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.