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Old 08-12-2008, 05:33 PM
 
25 posts, read 73,884 times
Reputation: 14

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Hi,

I have bought a house two months ago. I financed part of the house through a HELOC which I plan to pay in a much shorter time than my other loan (which is a 30 year fixed). My parents sold a family property overseas and my father wants to pay off my HELOC now. They are foreigners who have never done business in the U.S. My question is whether he can simply wire about $80K to my HELOC account to help me pay off this loan completely. Are there any tax implications if he does that? What is the best way to go about this?

Thanks!
Arcadio
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Old 08-12-2008, 05:34 PM
 
250 posts, read 71,866 times
Reputation: 46
Direct from your dad to your account, then YOU pay the mortgage.

Be honest, the IRS might want to know where that money came from.
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Old 08-12-2008, 06:28 PM
 
Location: Pennsylvania, USA
5,218 posts, read 2,209,567 times
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Quote:
Originally Posted by Arcadio View Post
Hi,

I have bought a house two months ago. I financed part of the house through a HELOC which I plan to pay in a much shorter time than my other loan (which is a 30 year fixed). My parents sold a family property overseas and my father wants to pay off my HELOC now. They are foreigners who have never done business in the U.S. My question is whether he can simply wire about $80K to my HELOC account to help me pay off this loan completely. Are there any tax implications if he does that? What is the best way to go about this?

Thanks!
Arcadio
I would consult with an accountant and or/attorney to be sure there are no implications to this.
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Old 08-12-2008, 09:22 PM
 
3,387 posts, read 8,022,179 times
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I think any transaction over 10,000 will be reported by the bank to the IRS.
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Old 08-13-2008, 12:12 PM
Status: ""I'm late! I'm late!" Says the White Rabbit" (set 16 days ago)
 
1,840 posts, read 1,790,982 times
Reputation: 2200
There won't be a problem receiving the money (via wire), but it will be reported to the IRS because it's over $10,000. You'll still be required to pay US taxes on the amount too as it is considered "income" by the IRS (sorry). You may want to consult a CPA to get advice on reducing the amount you pay though.

Sourcing the funds shouldn't be a problem since the proceeds came from the sale of real estate - regardless of what country. Your parents are liable for their country's laws, not you. I assume it is legal for them to give you some money from the sale of their home and that they wouldn't jeapordize your livelihood doing anything illegal.

Depending on your bank and account with them, there may be a fee applied to the wire.

Two websites that will detail money wires/transfers and may answer questions:

SWIFT and Fedwire Info

**Contact the bank your HELOC is drawn on and let them know your father wants to pay it down via a wire to them...this may help you avoid paying taxes as the money is coming from your parent's international account/bank directly to the HELOC loan. This may be the best way to not have the money deposited into your account and then withdrawn as payment to the HELOC. I'm pretty positive if your father pays them directly then you may be exempt from paying taxes on it because it is HIS money being used. Once it's in your regular bank account it will be considered yours. Your HELOC bank can instruct you if this can be done or if they will want the funds to come from you directly.

PS - my dad used to be VP of a national bank and I used to work as a Teller in college.

Good luck and Congrats!

Last edited by Jaded; 08-13-2008 at 12:27 PM..
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Old 08-13-2008, 12:32 PM
 
Location: Fort Myers, FL
1,286 posts, read 1,936,356 times
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I would contact your CPA-Certified Public Accountant or find one through the referral of someone. You want to know what the tax implications are on your end for having a sizable debt paid off.

The easiest way to pay off the HELOC is to call the 800 number on the statement and request a payoff letter. Then you can give your father the routing and account numbers to be wired to directly.
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Old 08-13-2008, 10:31 PM
 
25 posts, read 73,884 times
Reputation: 14
Thanks a lot for your responses. I will talk to a CPA to find out what my best option is.

A
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Old 08-15-2008, 07:35 PM
 
Location: Athens, GA
76 posts, read 270,790 times
Reputation: 53
I would not have the funds transferred directly to your HELOC. You will need a paper trail to document where the money came from as well as documentation to show that you yourself paid off the HELOC. I would have the funds transferred to your savings or money market account. Then after the funds have cleared, I would have the bank issue a Cashier's check payable to the company who holds your HELOC to payoff the account. If you want the HELOC account closed after that, you will need to surrender the checks or credit card tied to the account.

Yes, you will have to report the incoming funds received from your parents to the IRS, even if is a gift.
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Old 08-16-2008, 11:00 AM
Status: ""I'm late! I'm late!" Says the White Rabbit" (set 16 days ago)
 
1,840 posts, read 1,790,982 times
Reputation: 2200
Quote:
Originally Posted by GeorgiaGirl2 View Post
I would not have the funds transferred directly to your HELOC. You will need a paper trail to document where the money came from as well as documentation to show that you yourself paid off the HELOC. I would have the funds transferred to your savings or money market account. Then after the funds have cleared, I would have the bank issue a Cashier's check payable to the company who holds your HELOC to payoff the account. If you want the HELOC account closed after that, you will need to surrender the checks or credit card tied to the account.

Yes, you will have to report the incoming funds received from your parents to the IRS, even if is a gift.
Although the OP has already said he is going to seek the advice of a CPA - an excellent idea BTW - I'm curious as to why you believe that he'll need to "show" he's paid off the HELOC himself??? This isn't accurate. And, as far as explaining the "paper trail"...that's not correct either.

Again, just wondering where you got this info??
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Old 08-16-2008, 11:53 AM
 
Location: Apple Valley Calif
7,376 posts, read 11,783,586 times
Reputation: 4974
Your parents can each "Gift" you $12000 a year without tax ramifications. Let them each give you $12k each, or $24k total, and you will have it paid off in four years without having to hide from the tax man. When the day comes that they both pass, that amount will be taken into consideration, depending on the amount you inherit.
that being said, see a tax consultant you can trust.
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