Sell property as US resident / US non-resident

[pekodieu]

Hi Tax Expert,

My parents, who are from Vietnam, are planning to come to the US within the next two months to live with me. They will become green card holder, they intend to sell their property in Vietnam and gift all the proceeds to me. I understand that I need to inform the IRS about the gifted money, but I'm uncertain about any potential tax implications:

1. Do my parents need to pay any tax on the sale of their foreign property? They have used this property as their primary residence and have not generated any income from it. As far as I understand, if they have lived in the US for less than 183 days within the past three years, they would be considered non-residents and might not be subject to capital gains tax upon selling the property. Please correct me if I am mistaken.

2. Will I be required to pay any tax on the gift money from my parents?

Thank you for your assistance, and I eagerly await your response.

[ThomasM125 · Accepted solution]

You are correct in that your parents would not have to pay tax on the gain on sale of their house if they are non-residents, since the income is not sourced in the US. Also, you are correct regarding the 183 day rule, if they do not reside in the US for 183 days during the current year and the previous two years they would be non-residents. You can research this here:  Tax topic 851 - resident/non-resident alien

You do not have to pay any tax on the gift from your parents. You would be required to prepare Form 3520 if the gift was more than $100,000, but there would be no tax due. You can find more here:  Gifts from foreign persons