I have property in a foreign country and my sister lives in and is a citizen of that country. I am a citizen of the USA. She in turn has property in the USA. Can we swap properties if they are within the limit of 1M USD without either of us being liable for U.S taxes. The current thought is to do the swap as a gift exchange E.g I gift my foreign property to her and she in turn either gifts me her property in the USA OR deposits some amount in my U.S accounts through normal banking channel. Is this "gift exchange" legal ? We may be liable for taxes in the foreign land which we are willing to pay but the question is about being able to do so from a US perspective and avoiding US taxes as part of the swap

  • Are there any mortgages/loans on the property? – mhoran_psprep Feb 21 at 11:09
  • Why would you not simply exchange the properties one for the other? Then it's not a gift (assuming they are somewhere close to similar value). You also might find that tax people do not treat something as a gift if its given in exchange for something else. – DJClayworth Feb 21 at 16:59
  • @mhoran_psprep, there are is no mortgage on my property in the foreign country. – anant Feb 23 at 2:58
  • @DJClayworth 1. I was not aware the property could be swapped 2. I am not sure if the foreign country would allow a "swap". The foreign country is "okay" with gifts between siblings – anant Feb 23 at 2:59
  • You can swap anything for anything. It is possible that if you swapped a property worth $500,000 for a property worth $260,000 the US would consider that to be a gift of $250,000. And a swap would not get you out of paying tax on the transaction (probably), – DJClayworth Feb 23 at 3:39

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