Subject: H-1 Visa gift tax
Date: Friday February 16, 2007
Time: 08:58 PM -0500
I am a married Indian citizen and am on a H-1 visa. We are planning to buy a
house and my father in law (an Indian also), who stays in Bahrain, wants to
gift us the down payment up to $ 100,000. Is this legal? And if so, am I
liable to be taxed in anyway such as a gift tax? Please advise how do I
proceed on this?
david ingram replies:
If the gift comes from your father-in-law and he is NOT a resident of the
United States or in the United States when he gives it to you, he is NOT
subject to gift tax. However, he should specifically give it to you in
India or Bahrain. You can then transfer it electronically from their to
your account in the US.
If the money was already in the US, the IRS CAN make a claim for gift tax.
To be perfectly safe from "any" possible claim, he can give you and your
wife $12,000 each per year - If there ae children, he can give them $12,000
each. So, He could give your wife and you $24,000 this year and loan you
the $76,000 and then forgive $24,000 a year for three and a 1/3 more years.
He could give you and your wife $24,000 this year and his wife, your
Mother--in-law could give you another $13,000 and forgive another $24,000
Or if there are 2 children, mom could give you all $12,000 for a total of
$48,000 and he could give you $12,000 each for a total of $48,000 and you
would have $96,000 right now with NO possible tax consequences.
The consequences you DO have to worry about is the fact that you will always
be beholden in a "subtle" if not overt way. You may find that situation
harder to live with in the future. I am dealing with a two country divorce
now where the father in law just could not let the son in law forget that
"the only reason you have this house is that I gave you the down payment."
CEN-TA Cross Border Services - Tax, Visas, Immigration