Gift Tax for Non-Residents who Transfer U.S. Property Situs

Gift Tax for Non-Residents who Transfer U.S. Property Situs

Gift Tax for Non-Residents who Transfer U.S. Property

Gift Tax for Non-Residents who Transfer U.S. Property Situs: When a U.S. Person receives a gift from a foreign person, the IRS may require the Taxpayer to file a Form 3520, if the threshold exceeds the reporting threshold. There are different thresholds depending on whether the foreign person is an Individual or Entity. There are also related party rules to be aware of. But, the key ingredient is that the foreign person (who gave the gift) is not the person who has to file the form with the Internal Revenue Service.


Because the U.S. Government cannot exert tax or reporting requirements over a foreign person giving a foreign property gift, just because that person gave a foreign gift to a U.S. Person.

But, What if the Foreign Person gifts U.S. situs to a U.S. Person?

Non-Resident Gift of US Situs Property Example

Here is a common example we see often: Miranda is a U.S. Legal Permanent Resident.

Her foreign parents wanted to buy her a home, but they did not want her daughter to deal with FBAR & FATCA.

Therefore, instead opening an account overseas and depositing the money in the account for Miranda to purchase the house, they purchased the home direct — and then gifted it to Miranda.

Reporting the Non-Resident U.S. Situs Gift

The problem in this scenario, is that instead of giving Miranda a foreign money gift (in which Miranda would simply file a Form 3520), her parents (Non-Resident Aliens) gifted her U.S. Situs.

As a result, her parents must file a Gift Tax Return, and pay U.S. gift tax on the gift.

As provided by the IRS:

“Donors who are nonresidents not citizens of the United States are subject to gift (and generation-skipping transfer (GST)) taxes for gifts made of real and tangible property situated in the United States.

A person is considered a nonresident not a citizen of the United States if he or she, at the time the gift is made,

(1) was not a citizen of the United States and did not reside there, or

(2) was domiciled in a United States possession and acquired citizenship solely by reason of birth or residence in the possession.

Under certain circumstances, nonresidents who are not U.S. citizens are also subject to gift (and GST) taxes for gifts of intangible property. See sections 2501(a) and 2511(b).

If you are a nonresident not a citizen of the United States who made a gift subject to U.S. gift tax, you must file a gift tax return (Form 709 United States Gift (and Generation-Skipping Transfer) Tax Return) when any of the following apply:

  • You gave any gifts of future interests.
  • Your gifts of present interests to any donee other than your spouse total more than $15,000 (for 2020).
  • Your outright gifts to your spouse who is not a U.S. citizen total more than $157,000 (for 2020).”

If you are in the situation of not filing a gift tax return or form 3520, it is important to get compliant.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Golding & Golding Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced  Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant. 

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.

Font Resize