Gift (a house) Form a Foreign Person. Form 3520-Gift Tax.

[Shogun159]

Hello everyone,

-I have questions regarding a gift (a house) from my mom (non-US resident) and form 3520.

-My mom gifted me a real estate valued over $100,000 in a foreign country in 2022

-My mom is a non-US resident and I'm a US citizen. I understand that I have to report this to the IRS and file a paper form 3520 Part IV.

-My questions:

1/ First, this is not a trust but for an individual (which is me), so from what I understand, I just need to file 3520 as a final return, and don't have to file 3520-A next year, correct?

2/On 3520, line 54-column (b) Description of property received, what would I put here? My house's address? Actual description of property (4 story tall, 75m^2 area)? How would I describe that will please the IRS?

-column (c) FMV of property received: since my country property doesn't get appraised until sold (even if I tried to find an appraisal service, which is nonexistent), how would I determined the value of the property? Do I put the estimated value that I will be selling in the future?

3/ Since I was given in 2023, filed 3520 in 2024, and will not sell the house till 2025, do I still have to file another 3520 in 2025 for 2024 (technically I still owed a foreign estate in 2024 and part II of 3520 kinda specify that)?

4/ Could a tax preparer or CPA firm  file this form electronically? I'm afraid if filed through mail, IRS might lose the form in the process and I won't be able to prove that I filed the form.

[SusanY1 · Accepted solution]

You are correct that you do not have to file form 3520-A next year since you are not the beneficiary of a foreign trust.  For the description of the property, you can list something like "residential real estate in City, Province, Country" or really any description that works for you - the IRS won't be too particular about that part.  I would make your best reasonable guess as to the value of the property as of the date of your mother's death.  Any reasonable method to obtain that will work for the purposes of this form, which doesn't involve payment of tax or any requirement to prove that value at the time of the filing. 

You will not need to file the form again in 2024 - it's ‌a one-time report that you've inherited something of value from a foreign person. 

The form can't be filed electronically.   To address the concern about proof of filing, you can send via registered mail if you are sending it from within the US.  I can't locate a physical address listed on the form for courier service, so your options for proof of delivery are somewhat limited if you are sending it from outside of the US.  

[Shogun159]

Just to clarify, my mother hasn't passed away. Before becoming a US resident (which is in 2024), she gifted the house to me.  Does that change the filling requirement?

[DaveF1006]

No. The instructions specifically state that if you receive a gift that is valued more than $100,000 from a non-resident, you must report it on the 3520. Since your mother was a non-resident at the time of giving the gift, then it must be reported on a 3520.

[ppkea]

Hi - I have a similar situation and have a follow up question. Would appreciate your response urgently

I just have this real estatee gift and dont have more thn $10K in foreign bank accounts - so dont think i have to fill FBAR.  Am I correct?  If so - can I file my returns through e-Filing,  but send the form 3520 seperately.  How will IRS know? 

[SusanY1]

The only time that the IRS needs to be told that you're filing form 3520 when you file your income tax return is when there is an asset that would be reported on a form attached to your income tax return (Form 1040) but is not, because it is reported on the 3520. 

Since you won't report the real estate on your income tax return, there is no reason to "signal" the IRS that your Form 3520 is being filed separately (it is always filed separately - it just the indicator of that which is preventing e-file in some cases). 

@ppkea