How Can Parents Help Their Child Buy a Home in the U.S.?

Depending on family structure, tax planning, asset protection, and long-term goals, parents typically use the following methods:

1. Joint Purchase (Parent & Child)

How it works:

• Parent and child sign the contract together as co-buyers

• Ownership can be structured as Joint Tenants or Tenants in Common

• Either party’s income can be used to qualify for the mortgage, or they may apply jointly

Advantages:

• Stronger income and asset profile may improve loan approval

• Ownership shares can be customized

• Clear legal structure; suitable for long-term holding or shared investment

  
  

Important Considerations:

• Upon future resale, there may be capital gains tax, depreciation recapture, and federal/state/city tax obligations

• If classified as a “foreign person,” the seller may be subject to FIRPTA withholding (generally 15%) when selling U.S. real estate

  
  

2. Purchase Through an LLC (Limited Liability Company)

How it works:

• Form an LLC

• Members can be parents, children, or hold shares individually

• The LLC acts as the buyer in the transaction

• Financing options may include commercial loans (based on DSCR) or foreign national loans; approval typically focuses on rental income and asset reserves. Some lenders may require personal guarantees, subject to lender guidelines

Advantages：

• Privacy protection (property is titled under the LLC, not an individual’s name)

• Liability protection (separates personal assets from property-related risks)

• Flexible ownership structure (can allocate shares based on family planning)

• Suitable for multi-party investment with defined rules for capital contributions, profit distribution, and exit

Considerations：

• Generally not recommended for primary residences (insurance, financing, and taxes can be more complex)

• Ongoing LLC maintenance and accounting costs

• Certain tax benefits (such as primary residence capital gains exclusion) may not apply under an LLC structure; consult a CPA before proceeding

3. Overseas Cash Gift → Child Purchases Independently

How it works:

• Parents transfer funds from overseas to the child’s U.S. bank account

• Parents provide a Gift Letter stating the funds are a non-repayable gift

• The child purchases the property independently

• If financing is involved, banks will require proof of funds and documentation of the source

Advantages：

• Clear ownership under the child’s name

• If the parents are non-U.S. tax residents, the overseas gift generally does not trigger U.S. gift tax (though reporting may be required depending on amount)

• Simpler loan structure

• Suitable for long-term primary residence planning

Important Notes：

• For 2025, the annual IRS gift tax exclusion is $19,000 per donor per recipient. Amounts above this may require filing Form 709, though tax may not necessarily be owed. Married couples can combine exclusions (up to $38,000 per year).

• If the parents are non-U.S. persons and the gift originates overseas, it is generally not subject to U.S. gift tax, but proper documentation may still be required.

• If a U.S. person receives a large foreign gift (typically over $100,000 in a year), they may need to file Form 3520 for reporting purposes.

4. Purchase Through a Trust

How it works：

• Parents establish a revocable or irrevocable trust in the U.S.

• The property is titled under the trust

• The child is designated as the beneficiary

Advantages:

• Avoids probate; property can transfer directly to the child

• Better estate and tax planning

• Long-term asset protection

Important Notes:

• Trust setup requires professional assistance and may cost more than forming an LLC

• Tax treatment varies by trust type; consult a CPA for proper planning

ACRE works closely with accounting and law firms to help buyers evaluate different ownership structures before purchase. By aligning tax planning, asset allocation, and long-term goals, we help clients choose the most suitable and compliant structure to minimize potential tax and legal risks.