Buying a home is no longer a one-man business. Many young friends still need the support of their parents when buying a house. After all, high housing prices have overwhelmed a generation.
Especially in foreign countries, many international students still rely on their parents as “backers” to buy a house. Many children who immigrated to the United States or studied in the United States, when thinking about buying a house, their parents always ask, “How much is it?” Luck” past. So how should parents help their children with the budget to buy a house?
#1 Advantages of giving money to children to buy a house in the United States
If parents send money to their children to pay the down payment for buying a house in the United States, they can make their down payment ratio meet better loan conditions. Banks generally stipulate that a down payment of more than 25% can be exempted from loan insurance, and it also helps to enjoy the best interest rate. However, you will still have to show some documents to the loan officer to prove that your parents have financial support for you.
First, the loan officer will draw up a letter stating that the money was gifted to the home buyer by the parents and the amount will be listed, and then both parties (parent and child) will sign the letter.
However, if the money is transferred to the buyer’s account three months in advance, the bank will generally assume that the money has become your personal asset, so it will not ask the buyer to show the letter. Of course, the actual situation also depends on the specific situation of the individual. It can be said that with the help of parents, the process of purchasing a house for children has become easier.
#2 What are the benefits of buying a home for your children in the US?
The Internal Revenue Service (IRS) stipulates that each parent (including father-in-law, mother-in-law, father-in-law, and mother-in-law) can gift each child up to $14,000.
For example, a newlywed couple wants to buy a house. There are four parents on both sides. Each of them will give $14,000 to the young couple. Multiply $14,000 by 8, so that the young couple can receive up to $112,000 without paying gift tax. That’s definitely enough money for the newlyweds to put down a down payment on the house. On the $112,000 gift, the four parents do not have to pay gift tax, and the young couple who receive the gift do not have to pay income tax.
There are several ways to send extra money to your children.
The first is to send $14,000 to each child at the end of the year, and another $14,000 to each person at the beginning of the year, so that parents can give twice as much as the original annual gift tax exemption.
Second, if you can’t give away at the end of the year, there is a way to give more in the middle of the year. The IRS stipulates that each U.S. citizen or resident can enjoy a lifetime gift tax exemption of $5.43 million. So, the extra $14,000 in grant money can be used to deduct the $5.43 million in taxes.
For example, if each parent wanted to give each child $20,000, that would be $6,000 more than the annual tax-free gift ($14,000), and the $6,000 could be deducted from the $5.43 million, so it’s still tax-free. So, as long as parents (must be U.S. citizens and residents) don’t give more than $5.43 million to their children in their lifetime, there is no need to worry about paying gift tax.
What procedures do parents need to go through?
Now more and more Chinese students choose to stay in the United States after graduation, and then get married and have children. When it comes to buying a house, it is inevitable that their parents will help. If the parents have U.S. green cards or citizenship, then as above, their lifetime tax-free gift is $5.43 million; however, if the parents are Chinese nationals (and do not have a U.S. green card), their lifetime tax-free gift Only $60,000. But then again, even if Chinese parents donate more than this amount, the US government can’t control them. However, if the gifted child receives more than $100,000 per year in gifts from foreigners, the U.S. child (the giftee) must report to the U.S. government by filling out a Form 3250; if not, they will be fine.
As for parents with U.S. status, if they give their children more than $5.43 million in gifts each year, they must complete Form 709. Therefore, as long as the gift occurs and exceeds the prescribed tax-free amount, at least one party must take the initiative to report to the IRS.
Parents remit money from China to foreign
The Chinese government stipulates that each Chinese citizen can only remit 50,000 US dollars from China to foreign countries, including the United States. Parents are better off sending money directly from a Chinese account to their U.S. child’s account, rather than first sending money to a parent’s account in the U.S. and then to their child’s account.
Parents must also take note: Never give cash directly to your child and then have the child deposit into their own account. That’s because, in the United States, if more than $10,000 in cash is deposited into an individual’s account, that individual must detail the source of that income. If a child is studying and working in the United States, many Chinese parents will consider buying a house for him. However, depending on the stage and status of the child in the United States, the process of buying a house is also very different.
The relationship between H1B visa and OPT:
It starts with the children who go to school. Coming to the United States to study is an F1 visa, which is a student visa. OPT is an internship visa that students with F-1 visas can apply for to legally stay in the United States after graduation. F1 visa students can have 1 year of OPT after graduation. Students can find work internship units in the fields related to their majors, apply for OPT and get the EAD (Employment Authorization Document) issued by the Immigration Bureau, in order to convert from student status F1 to work Status H1B. Most people who develop in the United States will take this path:F1-OPT-H1B-green card.
Buying a home for a child on a student visa is easiest. But there is no advantage when taking a loan, in other words the interest rate on the loan will be higher than in other identities. You can pay in full to buy a house, or take a loan from a foreigner. After the child graduates, they can apply to the school for OPT. OPT is an internship visa for students who hold an F1 visa to legally stay in the United States after graduation.
From this stage, due to the income and the record of filing tax returns in the United States, you can enjoy the same low down payment ratio and low interest rate as American citizens when buying a house. And the loan conditions are also much looser. For example, the well-known large U.S. banks, JPMorgan Chase, and U.S. banks do not lend money to foreigners, but if you are OPT or H1B, you can borrow money from them. At the end of OPT, if you find a good job, the child’s status will become H1B, which is a work visa. This visa needs to be drawn, and whether it can be obtained depends on luck. Many outstanding Chinese children want to stay in the United States, but because they have not been drawn for this visa, they can only return to China. (Of course, excellent friends will have good development everywhere. This is only for friends who plan to stay in the United States~)
What are the advantages of buying a house with an H1B visa loan?
H1B has a natural advantage when taking a, you can enjoy the same low down payment and low interest rate treatment as U.S. citizens. Even if H1B is not selected, as long as the OPT is still valid, you can still enjoy the same low down payment and low interest rate treatment as U.S. citizens.
In terms of loan conditions, the choice of lending institutions will be relatively loose, and many lending banks can provide them. The loan conditions are also easy to meet. Since H1B is a work visa, it means that if you have a work card and recent income and tax returns, your loan requirements are the same as local loan requirements. , tax bills, and determine your loan amount and interest, and it is even possible that you can enjoy the self-occupied tax exemption clause.
What type of loan program is suitable for an H1B visa holder?
As a Chinese with an H1B visa, the loan you can apply for is likely to be a traditional American loan. The standard of “real estate beauty”. To do this, you need to meet the following conditions:
– A minimum credit score of 620
– No income limit
– Able to issue tax returns for at least two years.
With these conditions, you can apply for a loan, and the down payment ratio is also determined by the bank and the Lenders vary and will also depend on the amount of your loan. The mortgage insurance you will have to pay later will also be much less than the FHA, and the insurance fee will disappear after the loan amount is repaid to 20% of the home value. In addition, you do not need to pay additional agent fees and application fees.
The tax issues that may arise from the statute of limitations of the H1B visa are different from those of the green card holders. The H1B visa is a non-immigrant visa. With the subsequent extension period, you can work in the United States for six years. If you are still on an H1B visa, you will no longer be able to stay in the United States. Then if you plan to sell the property and leave the United States, then you need to pay income tax on the profit, but this tax is not low. If you plan to change your status, start preparing as soon as possible.
In short, for Chinese citizens holding H1B visas, as long as your supporting materials are comprehensive, your chances of getting a loan to buy a house will be high, and you can also enjoy certain discounts.
I hope this article can help friends who are interested in studying in the United States! If you have any intention to buy a house, you are welcome to come to me to consult the first-hand high-quality housing in New York!