I have a complicated Mortage situation. I am a green cd holder, married to an American Citizen

Asked by afterblue, 75218 Tue Aug 19, 2008

and I am planning to buy a home in Dallas. My parents who do not live here, wish to give me the proceeds of a home sale in their native country. Their lawyer mentioned that they will save on taxes if they get listed with us on the mortgage deed and can claim part of it as investment. They will not be claiming anything from the US governent, though since this money is partly mine, I shall be listing it in my returns. I just want to make sure I have a solution that is legal for all parties concerned that also saves us taxes. Can this be done? Is there a loan specialist with some experience in this kind of situation that I can consult with? (Thanks in advance for all help)

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David Hitchi…, , 75252
Tue Aug 19, 2008

Please contact Al Hewitt with Premier Nationwide Lending. He is as educated as anyone regarding situations like this. His number is 469-246-1108
1 vote
Viktor Taush…, Agent, Dallas, TX
Wed Aug 27, 2008
Hi, I had the same situation with friends from oversea. However I am from oversee myself too and had the same situation. Here is a little legal issue so don't take this a s legal advise. You will not pay taxes for any reason. If you need more information just please feel free to contact me.

More over you will be pre-approved based on requiramnts in US. All of the money you will receive from your parents will be as a gift. You just have to prove these funds witha letter.
0 votes
The Mortgage…, , Plano, TX
Wed Aug 20, 2008
First of all the portion that you will be taxed on here in the US is your gain on sale of the property in the foreign country. The taxable amount will be based on the gain and I would recommend that you show it as capital gain as the maximum tax rate is 15%. As far as the money that is not your share, your parents can gift you up to $12,000 without paying a gift tax. See IRS Publication 950 athttp:// http://www.irs.gov. If the amount of the gift is greater than $12,000 your parents could give an equal amount to your spouse without gift tax consequences. This is of course if you don't mind making the money community property. This is only a complication in the case of a divorce.
To answer your questions, yes you can apply for a mortgage in the US using downpayment funds that came from a foreign country. Whether the downpayment came from the sale of the property or from gifts, the mortgage company will need to know where the money came from.
There are two tax issues to consider, one is property taxes which is deductible and you can claim the amount paid against your income. The second tax benefit you should consider is the $7500 tax credit for first time homebuyers. Should you have questions concerning it you could contact Rob Craig at FireDream. His number is 469-252-3600 in Dallas. He's one of the best in the business and can explain these tax issues to you.
I'm not a tax attorney or a CPA. Please be sure to talk to one or both of them before making any decision on a complicated matter like this.
0 votes
T.E. & Naima…, Agent, Dallas, TX
Wed Aug 20, 2008
Your situation is not unique. A mortgage company will take into consideration your credit and income from here. That is the same process as any other person here purchasing. Can you qualify for a loan without your husband's income? The only thing they need to prove is the source of the downpayment. If it's a gift then the house will go under your name and your husband. Texas is a community property state so your husband will have to be on the deed of trust even if the house will be under your name only.

You will still be able to claim the house as your homestead & take advantage of the tax benefits. I assume that when you say your parents will save on taxes, you are talking about in their country not here.

I'll be happy to discuss further with you if you wish to give me a call.

Web Reference:  http://www.sumnerrealty.com
0 votes
Bruce Lynn, Agent, Coppell, TX
Tue Aug 19, 2008
I suggest you contact Marcus McCue at Guardian Mortgage 972-248-4663. I have many international clients and after going round and round and round with many, he's the one that allows handles everything quickly and efficiently and never with a problem in my epxerience. There must be tricks to these kinds of loans sometimes and what will work and what won't so he must know most of the tricks. One of the only lenders too that I've seen be ready two weeks early.
As far as the taxes....I don't think there is any savings for them on the US side, but perhaps in their home country as far as the sale and purchase is concerned. They'd need to check with their tax advisor there. We do have a similar provision in the US that certain profits from the sale of a home are expempt if reinvested in a primary residence within 2 years. We also have 1031 exchange savings if exchanging investment real estate. But that would apply perhaps to future purchases not this one I suspect.
The only other tax savings I can see is if they will now use this home as their primary residence and not as an invesment they can perhaps claim an over 65 years of age exemption on the property taxes if they are over 65? There are rules on residency so we'd just need to check your expectations. The other way to perhaps save taxes is gift/estate taxes depending on the size of their estate. If less than $1million it may not matter, if over $1million it might matter if they become residents here. The idea with that is they can gift you each year up to a certain limit like $10,000. So for example you buy a $500,000 home, they provide you $100,000 as downpayment. They can perhaps gift you $10,000 for the next 10 years to perhaps avoid some estate taxes. Now I am not a tax attorney, attorney or tax specialist and neither are most mortgage lenders, so depending on the size of the gift and the size of their estate and where they plan to live are probably the next questions to consider. There can be some negative consequences to this type of arrangement too, if they are not giving you the money but want to consider it as an investment. There are larger withholding requirements when you sell a home if you are a non-resident, and if there is little appreciation you could be forced to deposit money with a title company in order to sell the house, so some of these ideas might also depend on how long you intend to stay in the home, the price of the home, the amount of the investment by your parents and by you and your thoughts on appreciation. If you don't have a realtor yet, call me at 214-675-6992. I have many international clients and have often worked through a number of these situations.
Web Reference:  http://www.teamlynn.com
0 votes
afterblue, Home Buyer, 75218
Tue Aug 19, 2008

1. My first question was if I could apply for a mortage where part of the down payment was coming from another country as described in my question. (Thanks Mr. Hitchings, I'll contact Mr. Hewitt)

2. The Tax benefits - given that I am a first time home buyer with pretty much no idea of how property taxes work, I wasn't sure how I should go about this entire process. Do I speak to a mortage consultant first, to a tax lawyer first, to an accountant? Ms. Wagner, I guess I was looking for how and where to start.
0 votes
Sharon Wager, , Syracuse, NY
Tue Aug 19, 2008
Let me see if I've got this straight. Your parents are selling their home in another country and wish to gift you the proceeds. To save on taxes in their country, somone has advised that they should be listed as a co-borrower with you on a house here in the U.S.? If that's the case then you need to talk to someone in your native country.

Or are you trying to save on taxes here in the U.S.? And which ones - income or property taxes? If you're trying to save on your income taxes, then you need to talk to a tax accountant. If you're trying to save on your property taxes, I don't see where anything you've mentioned is applicable.
0 votes
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