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coolsheng1977
New Member

My parents live in China and want to buy apartment. They want to borrow $150k from me and return that back to me in 2 months. I plan to wire them money. Any tax concern?

 
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Opus 17
Level 15

My parents live in China and want to buy apartment. They want to borrow $150k from me and return that back to me in 2 months. I plan to wire them money. Any tax concern?

Yes.

If you treat it as a gift, then you need to file a form 709 gift tax return.  There is no gift tax owed unless your lifetime gifts given is more than $5 million, but you have to fill out the form to report it.  Then, when they give you the money back, you will have to file a separate report for receiving a gift from a foreign person of more than $100,000.  Again, no tax is owed, just the reports.  https://www.irs.gov/businesses/gifts-from-foreign-person

Or, if you treat it as loan, you don't have to file either gift report.  But, the IRS expects business transactions such as loans, to be handled in a businesslike manner and that requires charging interest.  If you don't charge your parents interest, you will still be required to report "imputed interest" -- the income you would have received if you charged the IRS minimum interest rate (currently an APR of 1.18%).

https://turbotax.intuit.com/tax-tips/tax-payments/irs-tax-rules-for-imputed-interest/L7UbulHpC

Neither of these requirements will cost you much money, but you should stick with the rules.  Your bank will automatically report any transaction of more than $10,000, so it will be good to have a proper paper trail either way.  (And don't think about splitting it up into 16 separate transactions of less than $10,000.  That's called "structuring" and is a separate crime even if the overall reason for the transactions is perfectly legitimate.)

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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