A family member (who lives in Asia) and I will be inheriting our family home (in Asia) from our parents. The inheritance process is rather complicated in the country and therefore, my parents would like to transfer the property to both or one of our names before they passed on. Since the family member is not interested in the property, he has agreed to sell off his share of the property to me next year so that the title can solely be in my name. Does anyone know what the US tax implication is for reporting (when the title is transferred to my name) and later on for when I sell the property (I will keep it at least 5 years) to minimize the country local capital gains tax? It will not be a primary residence or a rental property (will be used my other family members with no rent payments).
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posted: Sep. 28, 2016 @ 9:54p
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Senior Member - 3K
Sep. 28, 2016 @ 10:52p
posted: Sep. 28, 2016 @ 10:50p
Do a Google for an international lawyer who has a clue about the country you are concerned about. Expect it to be expensive.
How are you going to maintain the property or keep folks from being squatters if the family members decide to leave??? They often claim rights over the spaces they have squatted by virtue of occupation, rather than ownership; in this sense, squatting is similar to (and potentially a necessary condition of) adverse possession, by which a possessor of real property without title may eventually gain legal title to the real property.
How are you going to do upkeep and simple chores like mowing grass?
How often will you need to visit the property and at what cost?
My parents will be living in the property. When they have no need for it, I will probably sell the property. For the moment and to keep the discussion focused, my question surrounds US taxes for now. I have already consulted local lawyers for that country.
FridayGal said: My parents will be living in the property. When they have no need for it, I will probably sell the property. For the moment and to keep the discussion focused, my question surrounds US taxes for now. I have already consulted local lawyers for that country.
Sounds like its time to consult a tax attorney here.
IMHO, the transfer of property from your parents will be treated as gift from them. Assuming they are not a US person, there will be no US tax implication for them. If the value of the property received is in excess of a certain amount, you may be required to file Form 3520 with your US tax return. The purchase of other half from your family member will be treated as any other property purchase. When you sell, the basis of the property will be the price you paid to purchase from your family member. If you inherit the property (after your parents pass), your basis in your share of property will be the fair market value on the date of death. For more information on Form 3520 - https://www.irs.gov/businesses/gifts-from-foreign-person
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