Foreign cash „gift“ for property purchase

[Zuckerschnulli]

Hi everyone 

I am a greencard holder living in the US. 

My parents are German citizens, living in Germany who want to buy a house in the US for me to love in. 

The house will be on their name.

They are sending money to my US account so I can Wire Transfer it to the Escrow company at the time of closing. 

I’m now wondering if that would be treated as a foreign cash gift or as something else? Technically they aren’t gifting me anything since the funds will be used to buy a house for them. Would I need to file form 3520 or something else? 

[DoninGA]

The question is why are you involved in this purchase at all?  

Your parent's can wire transfer the purchase funds to the escrow account from Germany.  Since they are purchasing the property in their name they will have to physically sign the purchase and title documents and have those signatures notarized with a Notary in Germany.

[Zuckerschnulli]

Thank you for your response!

They will be signing all the documents with a notary in Germany. 

The problem is that their German bank uses a very poor exchange rate for international wire transfers and they would loose around $20.000 going that route. They want to ACH Transfer the money to the US to secure a better exchange rate. Unfortunately Escrow doesn’t accept ACH transfers so they are sending it to my US account and I will wire transfer it to the Escrow company. 

[macuser_22]

To be  gift them money must be given to you with no strings attached for you do do anything you want to do with the money.   What you describe is a money laundering scheme, not a gift.   Whether that is legal or not, I don't know, but I do know that it is not a gift and might possibly raise government suspicions if over $10,000.

You should ask an attorney that deals with international money transfers.

[Zuckerschnulli]

Thank you for your response. The money is coming from the sale of a property back in Europe and we have all the documents to prove that. 

We are not trying to avoid taxes or hide the fact that my parents are buying property here. We are just looking for a way to get a secured exchange rate. If my parents had an US bank account they would just deposit the funds there but unfortunately they don’t. 

[Carl]

Unfortunately Escrow doesn’t accept ACH transfers

Really? That sounds really fishy to me. Either your escrow agent is trying to "hide the money trail" or they have no clue what they're talking about. Find another escrow agent. If they want the money, they'll accept it via any way the payer desires to transfer it. I've *NEVER* heard of an escrow agent that would not accept ACH, wire transfer or *any* other legal means of transferring money.

Bottom line is, *YOU* need to stay *OUT* of this transaction at all costs. I smell a rat.

[Zuckerschnulli]

Thank you for your input Carl. I have talked to numerous Escrow companies in our Area (PNW) and all of them stated that they don’t accept ACH because it is considered “unsafe”. Apparently an ACH Transfer can be revoked by the sender for a certain amount of time and that is why they don’t accept them. 

[macuser_22]

If that was the case then *your* bank would also not accept it for the same reason.   (They wait for any such time period to pass before you can touch the many and so can anyone else.)

If that is the case then your parent should open a us bank account but you should not be the middleman in such a large transaction.   There could be legal issues so ask a qualified attorney.