large wire transfer from India to USA

[guri0121]

My friend is selling a property in India next month, and she's going to pay all the taxes in India.

1. What's the procedure to get the funds from India to the USA? She has an NRO account and is a USA citizen.

2. Should she fill out any IRS forms this year to let them know where the funds are coming from?

3. She's going to be my private lender, paying my mortgage, and then I am going to pay her monthly. Do I need to fill out any IRS forms, or would it be considered a gift? If yes, how much would be the gift percentage even though we are going to have a loan agreement?

4. Can she transfer the funds directly to my mortgage company from India, or should she give me the funds in India, and then I can bring the money to the USA or pay it directly to the mortgage company?

Thank you in advance.

[AmyC]

1. Not in our tax advice scope. You will need to consult with professionals in the banking industry.

2. No, you don't need to fill forms for the IRS ahead of time.

3. Since it is a mortgage loan and you will be repaying her, it is not a gift. No extra forms to fill out.

4. I would recommend she pay the mortgage company to avoid you being involved in the transfer and having the money in your hands.

[rjs]

I can see some potential traps here.

If you want to be able to claim a deduction on your U.S. taxes for the interest that you pay to your friend, the loan agreement has to meet certain requirements. It has to be an actual mortgage, secured by your home, not just a personal loan. And the mortgage has to be properly recorded.

Whether it's a mortgage or a personal loan, you and your friend have to have a payment schedule showing how much of each payment is interest. She will have to report the interest that you pay as income on her U.S. tax return, even if you cannot deduct the interest on your tax return.

Also, when your friend pays off your existing mortgage, for your own protection you have to make sure that the satisfaction of the existing mortgage is properly recorded, and that you get a document from the mortgage company saying that it has been paid off.

You should consult a local lawyer and a tax professional about these issues. This is not a do-it-yourself project.