I live in the US (a student on an F1 visa) and my dad, who lives in India, is buying a house in India. He wants to register the house in my name, just as a gesture. I am NOT investing any money in the house and I will NOT be getting any income from the house (in the form of rent or anything else). All the income from the house will go directly into my dad's bank account. Only the house will be registered in my name and nothing else.

Are there any implications on US taxes, either now or in the future, because of this? Is it wise for my dad to register it in my name or should I ask him to register the house in his name instead?

Any advice/help is appreciated!

  • Why is your dad doing it? If it is his money and all the proceeds go back to him - why is he registering it in your name? – littleadv Dec 22 '14 at 5:37
  • Because this is an unusual thing, can you confirm that when you say "register in my name" that means you are the legal owner of the house? – DJClayworth Dec 22 '14 at 16:11
  • @littleadv my dad is just doing it as a gesture. i might eventually go and live in that home (some 30 years down the line or so). – Vignesh Venkat Dec 23 '14 at 0:03
  • @DJClayworth yes, i will be the legal owner of the house. but i will not be making any income out of it. – Vignesh Venkat Dec 23 '14 at 0:04

I'm going to assume that by "register the house in my name" you mean that the house is legally yours. In that case there are a number of implications, tax and otherwise.

  1. Your father should be aware that if you own the house you can do whatever you like with it. Unless there is a contract saying otherwise, you could decide to sell the house, move to India and live in it yourself. You may not want to now, but you could at any time. You would also have no obligation to sell the house when your father wants to.
  2. If you were to unexpectedly die the house would not automatically go to your father's ownership. Unless you specifically write a will that says this, it would go to your next of kin with any other stuff you own.
  3. If you were to go bankrupt the house might be sold off to cover your debts.
  4. The transfer of the house to you would be a gift for tax purposes, and unless the value falls within the gift limits, you might be liable to tax on it.
  5. Any income from the house that went to your father might also be considered a gift for tax purposes.. You might also have to pay tax on that income, since it should be coming to you as the owner of the house.
  6. Tax authorities might want to know why your father is making money from a house he doesn't own.
  7. Any gain or loss on the value of the house is yours, and you might have to pay tax on any increased value.
  8. If there is a lawsuit regarding the house, you might be liable. For example the house might collapses and kill somebody.

You should also be very clear with your father about what happens when the house is sold. Do you give him back what he paid for it? Does he get all the value? What happens if the value has gone down?

Some of this is down to Indian law, which I know nothing about. However all of these are red flags which you should consider before doing this. This is not legal advice in any jurisdiction.

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    thank you so much for the detailed answer. it is pretty common in india for people to buy houses in the next-of-kins' name (because in india, if you own more than one house, you will have to pay income tax on the second one irrespective of whether you have rented it out or not). in my case, the key difference is that i live in the US and i was concerned if i would have to declare it in my US tax returns or i could end up paying unnecessary taxes just because it is in my name. – Vignesh Venkat Dec 23 '14 at 0:07
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    @VigneshVenkat the short answer is yes, you could and you would. The long answer is to read carefully what DJClayworth wrote and start researching every point. – littleadv Dec 23 '14 at 3:10

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