[Cuptor]

My wife's parents intend to donate us a huge chunk of money to help secure our future. We are reluctant about investing it in the stock market and were thinking about buying a second house. Home prices are very attractive now and a home seems a more secure investment to us. We could also rent it.

What are the taxes implications of such a donation?

The parents have already donated us the amount to pay in full the loan for our current house. Does this have an impact on how IRS is looking at the second donation?

The parents are not US citizens and don't live in US.

Thank you,
Cuptor

[Perito]

It's a "gift", not a donation.

If it's over the limit, you may be subject to gift taxes. The only effect the first gift will have is if it was given in the same year.

Frequently Asked Questions on Gift Taxes

[Cuptor]

Yes, it's a gift. To me it was kind of the same thing though.

[AtlantaTaxExpert]

Normally, the parents would have to pay gift taxes on the money being given over a set amount per year.

However, since the parents are NOT U.S. citizens or U.S. residents, no gift taxes will be due.

Just make sure you can show from where the money came, and you should have no problems tax-wise.

[IntlTax]

If the gift exceeds $100,000 in any year, you should report the gift on Part IV of Form 3520. Penalties can apply if the gift exceeds $100,000 and is not reported.