[Sykes]

I have a condo that I am thinking of gifting to my mother. I am a green card holder, my mother is a non-resident. What would happen if/when my mother chooses to sell the condo?

Would she pay tax on the gains and would the gains be considered the full selling price as the condo was gifted to her?

Or does it make more scene for me to keep hold of the condo and allow my mother to have exclusive use.

Thanks for any advise and please let me know if I need to clarify any issues?

[MukatA]

You must file gift tax return if the gift amount exceeds $12,000.

If the condo is in the U.S. any profit from sale is subject to U.S. taxes. She may exclude gain of up to $250,000 if she lived in the condo for two years and owned the condo for two years in last 5-years.

[AtlantaTaxExpert]

In my opinion, you would do better to retain the condo and allow your mother to have exclusive use. That way, you still own it when and if she no longer has a need for it.

You can even rent it to her and claim the rental income and allowable deductions using Schedule E. Under most circumstances, the combination of mortgage interest, property taxes and the depreciation of the property will result in a paper loss on your tax return, which can reduce other income sources provided you do not make more than about $150,000 per year.

To be legal, though, you must treat your mother as if she was a stranger, meaning you would need a lease and monthly payment of the rent. The IRS closely reviews any return where blood relatives are tenants.

[IntlTax]

If you gift to your mother she will need to pay tax on the gain. The purchasers of the property will be required to withhold 10% of the purchase price (under the FIRPTA rules) and your mother will have to obtain a U.S. ITIN and file a U.S. tax return.

[Sykes]

Thanks guys, it sounds like the best idea is just to keep the property in my name and let Mum uses as she wishes.

Can I ask a slightly different question but along the same lines. My Mum has owned a vacation home in FL for many years (5+), what would happen if/when she were to pass away and bequeath it to me, as she plans to do? Are there different estate rules for non-res vs residents?

[IntlTax]

U.S. estate taxes are one of the biggest concerns with foreigners owning U.S. real property. Upon your mother's passing, the U.S. real property would be subject to U.S. estate tax and the exemption for a nonresident alien is only $60,000. The estate tax rates get high fast.

If she gifts the property to you, any amount in excess of $12,000 would be subject to U.S. gift tax (no $1,000,000 exemption from gift taxes for nonresident aliens).

[Sykes]

Is there a good tactic to use to minimize the estate tax burden on real property, would it help if the property was owned by a trust that is offshore?

[IntlTax]

There is no single good tactic. Each has its own costs/risks. Some sophisticated structures use offshore trusts but can be expensive to set up and maintain, and often the trust should be the original owner of the property.