I'm a US citizen living in CA. However, my parents are not citizens and living in Europe.
They consider buying a real estate investment in cash (about ~60K). I want to know the tax implication for writing the house under my name.
The idea is that they will buy the house with their own money, will get any cash flow (if there's any), and pay for repairs. I will write the property under my name and, hopefully, later would refinance it to pull out some cash.
We're in a good relationship, so there are no worries regarding stealing money from each other or anything along these lines.
My main concerns are tax-related; is that a taxable event, how much, is there a way to avoid/reduce it? Given that the house costs about 60K, and "looking on it from the side" may seems like a big gift/present (which it isn't)
New to Real Estate · Hong Kong · Member since 2019 · 44 posts · 16 votes
4y
@Leeor Neh I guess my broader question would be what is the purpose of you putting your name on the deed of the property when it sounds like in substance/economically it is your parent's investment? What are you trying to achieve with this?
If the property really wasn't yours and you were more of a nominee/agent with your name on all the legal documentation on behalf of your parents, in all likelihood if the IRS audited you and had all the facts, they would probably disregard the legal ownership and treat your parents as the true owners for US tax purposes.
Even if it was a gift, gifts are not subject to income tax but would be includable in your estate and since your non-US person parents were gifting US real estate, they would be subject to US gift tax on the excess of the gift above the annual exclusion (15k I believe). Non-US persons don't get the (as of 2021) 11M combined gift/estate tax exemption like US persons do.
From what I've seen it certainly complicates things by doing it this way and gets really messy when it's time to sell and then you have to figure out who needs to pay the tax on any capital gain/how to file all that.