Dear Mr. Ingram,
My wife and I are Canadian citizens living in Vancouver.
My daughter is married to an American (for 5 years) and they have lived in
the USA for 3 years, currently living in Washington state.
We want to give them $200,000 to help buy a home.
Will they or us have a problem with the US gift tax? Should it be a loan (no
interest) instead of a gift?
Is there a state gift tax or are there other potential problems that I
should be looking at?
As an alternative, can my wife and I each gift $12,000 to each of them in
2007 ($48,000) and then the same in 2008, then another $24,000 in 2008 to
our grandchild when their first child is born in May?
Thank you in advance
Yours truly,
Txxx---------------------------------------------------------david ingram replies:There are no gift taxes in Canada.You can give them any amount you choose to.I have never seen a Canadian gift to an American challenged in any way provided that the Canadian does not have a US presence of any sort.For instance, if you owned a Condo in Scottsdale Arizona and gave that condo to your daughter and son in-law, it would be subject to gift tax..And, if you gave US stock to them (even if the stock was in a safety deposit box in Toronto) the US stock would be subject to gift tax and is also subject to estate tax even if you have never been in the USA.. If you already had $500,000 in an American financial institution and put their names on teh account, it would be subject to gift tax.If you wanted to be absolutely sure, you could do the $48,000 now, again in January and then $24,000 to the grandcjhild and then loan them the rest and forgive ethe loan or give another $72,000 it to them in Jan 2009.-----------------------------------------
QUESTION:
My husband and I would like to assist my daughter and her husband in purchasing their first home in Illinois. Due to their level of income at this time {new baby, just married, husband just starting in his career, both have college degrees, great future... etc}its not enough to qualify for the modest house they would like to buy.
How can my husband and I help them out? Is there a limit on how much cash we can send them? Can we co-sign on a US mortagage? Can we buy the house and have them live in it, having them pay us rent to cover the mortgage costs.. would we have to live in the house in the US for any part of the year? What suggestions might there be? By the way, my daughter is in the US legally after having gone through the hassles of alien fiance visa - and her/their son, born in Canada, has dual citizenship.
-------------------------------------------------------
david ingram replies:
You are not subject to gift tax. You can give any amount you want to yor son and law and daughter and grandchild.
Whatever you do, don't buy the house and rent it to them unless you really like filling out paperwork and are willing to pay capital gains tax on any increase in value.
You could, I suppose, buy it in your name with a provisio in writing that it is their house and you are holding it in trust for them.
They would then make all payments for everything (although you could give them a gift once in a while) and treat it as their own and when their fortunes changed enough or the mortgage came up for renewal or something, it could be transferred to their name but if you do this make sure that you have a document in place that has proper witnessing, etc.
This same thing can be done in Canada to get a property for children and make sure that they sell tax free as a personal residence.
Even without the documentation, if your children are treating the property as their own it is called a constructive trust and is likely theirs tax free if all the money goes to them upon sale (after paying back something yo may have loaned them).
Bill Spohn, a West Vancouver lawyer did send a caveat (that you should have paperwork) to a previous Q & A which I agree with wholeheartedly . He has given it a lot of thought. You can contact him for some legal advice about how to do the paperwork if you wanted some ideas.WSpohn at aol.com. Please note that his comment was about Canada only and he is not a US lawyer.
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Therefore, if an email is not answered in 24 to 36 hours, it is lost in space. You can try and resend it but if important, you will have to phone to make an appointment. Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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Cell (604) 657-8451 -
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Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada.
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits no move in or out
$1,600 would be for two people with income from two countries
$2,800 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales) are likely $50.00 for the first and $20.00 each after that.
Just a guideline not etched in stone.
This from "ask an income trusts tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate tax returns with multi jurisdictional cross and trans border expatriate problems for the United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax Immigration Wizard Antarctica Rwanda Guru Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention
David Ingram expert income tax and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty
New York, Boston, Sacramento, Minneapolis, Salem, Wheeling, Philadelphia, Pittsburgh, Atlanta, Pensacola, Miami, St Petersburg, Naples, Fort Myers, Cape Coral, Orlando, Atlanta, Arlington, Washington, Hudson, Green Bay, Minot, Portland, Seattle, St John, St John's, Fredericton, Quebec, Moncton, Truro, Atlanta, Charleston, San Francisco, Los Angeles, San Diego, Sacramento, Taos, Grand Canyon, Reno, Las Vegas, Phoenix, Sun City, Tulsa, Monteray, Carmel, Morgantown, Bemidji, Sandpointe, Pocatello, Bellingham, Custer, Grand Forks, Lead, Rapid City, Mitchell, Kansas City, Lawrence, Houston, Albany, Framingham, Cambridge, London, Paris, Prince George, Prince Rupert, Whitehorse, Anchorage, Fairbanks, Frankfurt, The Hague, Lisbon, Madrid, Atlanta, Myrtle Beach, Key West, Cape Coral, Fort Meyers, Berlin, Hamburg, Warsaw, Auckland, Wellington, Honolulu, Maui, Kuwait, Molokai, Beijing, Shanghai, Tokyo, Manilla, Kent, Winnipeg, Saskatoon, Regina, Red Deer, Olds, Medicine Hat, Lethbridge, Moose Jaw, Brandon, Portage La Prairie, Davidson, Craik, Edmonton, Calgary, Victoria, Vancouver, Burnaby, Surrey, Edinburgh, Dublin, Belfast, Glasgow, Copenhagen, Oslo, Munich, Sydney, Nanaimo, Brisbane, Melbourne, Darwin, Perth, Athens, Rome, Berne, Zurich, Kyoto, Nanking, Rio De Janeiro, Brasilia, Colombo, Buenos Aries, Squamish, Churchill, Lima, Santiago, Abbotsford, Cologne, Yorkshire, Hope, Penticton, Kelowna, Vernon, Fort MacLeod, Deer Lodge, Springfield, St Louis, Centralia, Bradford, Stratford on Avon, Niagara Falls, Atlin, Fort Nelson, Fort St James, Red Deer, Drumheller, Fortune, Red Bank, Marystown, Cape Spears, Truro, Charlottetown, Summerside, Niagara Falls, income trust, Income Tax Treaty Convention
international non-resident cross border expert income tax & immigration help estate family trust assistance expert preparation & immigration consultant david ingram, income trusts experts on rentals mutual funds RRSP RESP IRA 401(K) & divorce preparer preparers consultants Income Tax Convention Treaty
Be ALERT, the world needs more "lerts"
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