Gift Tax , USA

[Spaniel]

I am planning to help my son buy a condo in the USA by giving him a sizeable amount of money for the down payment.      My wife and I can each gift him $14,000.       I am trying to decide if it would be better to give him the cash as a gift or make it a loan and have him repay us by letting us stay in the condo two months per year for free as payment for the loan.     Any suggestions?

[tonray]

The IRS will consider an interest free loan as a loan with an imputed interest rate for said type of loan (gift) and you will technically be liable for paying taxes on the interest you did not receive.

Edited February 11, 2018 by tonray

[Rhys]

Thus.... what is the best way to send or receive money for this amount... Is it 10K that the IRS is alerted ... going in or going out of your accounts.    I too would like to send around that amount to my family for gifts and exchanges...

[Monomial]

Just out of curiosity, you do know that while US citizens may be required to file a gift tax return, they can gift up to $5.5 million during a lifetime with no taxes due.

Have you actually reached your limit already? If not, there is no reason you can not gift the entire amount and simply file a gift tax return.

Foreign citizens not living in the USA can gift an unlimited amount and no gift taxes are due in most circumstances. The receiver simply has to file a form notifying the IRS of the gift.

Perhaps if you can tell us more about your situation we can give you better advice.

[Spaniel]

Thanks for the replies.      I called the lady in the USA who had done my federal tax return a couple of years ago and she said not to worry about it.      Give him the money and forget the gift tax filing.

[jerry921]

I think you need a new accountant.

[Thailand J]

" I am planning to help my son buy a condo in the USA by giving him a sizeable amount of money for the down payment.      My wife and I can each gift him $14,000.       I am trying to decide if it would be better to give him the cash as a gift or make it a loan and have him repay us by letting us stay in the condo two months per year for free as payment for the loan.     Any suggestions? "

 

Keep it simple, give him a lump sum  as a gift and file Form 709.

Up to $15,000  in 2018, no gift tax and Form 709 reporting is not required.

Up to $11,215,000, no gift tax, but you will have to file Form 709, United States Gift ( and generation-Skipping transfer) Tax Return.

Form 709 2017 was very simple if you do not have prior gifts, do not involve credit from a deceased spouse and do not skip a generation. Finish Page 1 Part 1, don’t goto Part 2 yet. Go to Schedule A Part 1 and 4, then finish Page 1 Part 2. Done. You don’t have to goto Schedule B, C and D. For those who have to, Schedule B Column C is a pain.

I think you can do it yourself but of course it’s better to get a C.P A.

 

I have bought a few properties for the kids, did not always went well.

1.First house: lost in a divorce. Should have kept it in my name but who knew.

2.Second house :Grand kid attacked me with a knife.

3.Third house: In-law wants to borrow money when I visit.

4.Forth house: Lazy housewife I have to cook and clean when I visit.

[Thailand J]

On 2/12/2018 at 12:22 AM, Rhys said:

Thus.... what is the best way to send or receive money for this amount... Is it 10K that the IRS is alerted ... going in or going out of your accounts.    I too would like to send around that amount to my family for gifts and exchanges...

Electronic transfer.

Cash transactions over $10,000 will be reported by the bank, and attract unnecessary IRS attention.but not electronic fund  transfers.

Electronic fund transfers over $3000 will have a detail record kept at  the bank available to the government when requested, for example if you are unluckily audited and the IRS wants to see your bank account. Rare but possible.

Cash or bank transfer, there is nothing to worry if you can explain where the money is from and have been filing your taxes correctly.