Do we have to pay taxes on a foreign gift from my parents?

October 10, 2011

Subject:  Cash Gift
From:  Sandy
Date:  28 Sep 2011

Hi Mr. Gray:

Do we have to pay taxes on a gift of $200,000 from my parents for our investment home? My parents live in a foreign country.

Thanks for your time.

Answer

Date:  3 Oct 2011

Hello Sandy,

Gifts are not taxable income. Federal gift taxes are imposed on the donor, not the donee/recipient. Gifts of more than $100,000 from a foreign person must be reported on Form 3520, which you can find at www.irs.gov. The form is due at the same time as your federal income tax return. For 2011, that will be April 16, 2012. Your parents should see a tax consultant in their country to find out if they are subject to a transfer tax of some kind for this transaction.

Good luck!


Mike Gray

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