TRUST: $470K Gift to Purchase Real Estate

[broker1]

What is the name of your state (only U.S. law)? California

Hi folks,

First time posting here. Here's my question.

My family is looking to purchase a home. There is an intricacy that may be solved with a use of a Trust. Here is the deal:

My sister and her husband currently live in Israel with plans on moving to the US within the next few years. They are not US citizens. They would like to send $470K to my mother so she can purchase a home, that will be her primary residence, in her name. However, I believe they would have to pay a gift-tax on the moneys that they send over or my mother would have to pay taxes.

Is there any type of Trust that can be set up to go around the tax implications of such a gift? This Trust will be purchasing the home in its name.

Thank you,

 

[davew128]

Using a trust to move cash doesn't avoid gift tax. HOWEVER, if the money is wired in from a foreign bank account, sister and husband should not be subject to gift tax anyway. That all being said, hire someone to research applicable gift tax law and confirm it.

 

[LdiJ]

What is the name of your state (only U.S. law)? California

Hi folks,

First time posting here. Here's my question.

My family is looking to purchase a home. There is an intricacy that may be solved with a use of a Trust. Here is the deal:

My sister and her husband currently live in Israel with plans on moving to the US within the next few years. They are not US citizens. They would like to send $470K to my mother so she can purchase a home, that will be her primary residence, in her name. However, I believe they would have to pay a gift-tax on the moneys that they send over or my mother would have to pay taxes.

Is there any type of Trust that can be set up to go around the tax implications of such a gift? This Trust will be purchasing the home in its name.

Thank you,

Alexander

Gift taxes apply to the givers of gifts, not to the recipients. Therefore the gift would not be subject to gift tax, as the US cannot impose taxes on someone who is not a citizen of the US on money that was not earned in the US.

However, your mother would have to report the gift, for homeland security purposes using IRS form 3520.

 

[davew128]

Gift taxes apply to the givers of gifts, not to the recipients. Therefore the gift would not be subject to gift tax, as the US cannot impose taxes on someone who is not a citizen of the US on money that was not earned in the US.

This is NOT true. The US can impose gift tax on an NRA for any gift of tangible property located IN The US. Cash is tangible property as is a check written on a US bank.

However, your mother would have to report the gift, for homeland security purposes using IRS form 3520.

Homeland Security has nothing to do with it. Form 3520 and the code section and regulations that require it predate the very existence of the agency.

 

[Zigner]

This is NOT true. The US can impose gift tax on an NRA for any gift of tangible property located IN The US. Cash is tangible property as is a check written on a US bank.

What cash?
What check?

 

[LdiJ]

This is NOT true. The US can impose gift tax on an NRA for any gift of tangible property located IN The US. Cash is tangible property as is a check written on a US bank.

Homeland Security has nothing to do with it. Form 3520 and the code section and regulations that require it predate the very existence of the agency.

Dave, the money is coming from abroad. The original post was pretty clear about that.

 

[davew128]

Dave, the money is coming from abroad. The original post was pretty clear about that.

Actually, no it wasn't. It said the DONOR was abroad. It said nothing about where the money is. I deal with NRA's ALL. THE. TIME. Many of them have money in US banks and investment accounts.

And your comment was factually wrong.

Therefore the gift would not be subject to gift tax, as the US cannot impose taxes on someone who is not a citizen of the US on money that was not earned in the US.

This is absolutely FALSE. I'm not going to spend the time posting cites regarding actual cases involving cash and bank accounts (which you can google) but you could start with the IRC. A gift of tangible property with situs in the US is subject to gift tax even to a non-resident alien.

 

[davew128]

What cash?
What check?

Follow my posts in this thread and you will quickly understand.

 

[Zigner]

Actually, no it wasn't. It said the DONOR was abroad. It said nothing about where the money is.

My sister and her husband currently live in Israel with plans on moving to the US within the next few years. They are not US citizens. They would like to send $470K to my mother so she can purchase a home, that will be her primary residence, in her name. However, I believe they would have to pay a gift-tax on the moneys that they send over or my mother would have to pay taxes.

It wasn't explicitly stated, but the implication was VERY strong and VERY clear. The money is IN Israel and will be SENT TO the US.

 

[broker1]

To clear up the arguments above, the money is in an Israeli bank account. It can be wired.

 

[davew128]

It wasn't explicitly stated, but the implication was VERY strong and VERY clear. The money is IN Israel and will be SENT TO the US.

We know that now only because the OP has cleared it up. I'm sorry, but you cannot say it was implicitly stated. When dealing this specific issue, what people say and what they mean cannot be read into. Only the exact facts matter. It really IS that detailed and I'm speaking from experience dealing with NRA's who've said similar things and then their US relative walks in three days later with a check drawn on Bank of America.

 

[Zigner]

We know that now only because the OP has cleared it up. I'm sorry, but you cannot say it was implicitly stated. When dealing this specific issue, what people say and what they mean cannot be read into. Only the exact facts matter. It really IS that detailed and I'm speaking from experience dealing with NRA's who've said similar things and then their US relative walks in three days later with a check drawn on Bank of America.

You inferred that the money was in the US. I inferred that the money was in Israel.
Which inference was more appropriate, yours or mine?

I'm speaking to correctness, I'm speaking to appropriateness. The POINT is that you are blasting me for making an inference when you made just as much of an inference. At best, you should have asked for clarification.


ETA: Your inference was actually less appropriate based on the information given in the original post, but I'm being generous

 

[davew128]

You inferred that the money was in the US. I inferred that the money was in Israel.
Which inference was more appropriate, yours or mine?

I'm speaking to correctness, I'm speaking to appropriateness. The POINT is that you are blasting me for making an inference when you made just as much of an inference. At best, you should have asked for clarification.


ETA: Your inference was actually less appropriate based on the information given in the original post, but I'm being generous

Up until the time the courts ruled otherwise, the distinction wouldn't have mattered because it was the IRS position that the check on the foreign bank was a taxable gift too.

 

[broker1]

Does anyone have an answer to my question, guys?

 

[tranquility]

Um...your question is difficult and deals with many things. To give a true answer, see advisor(s). It is not really a question for the internet. Sorry.