Promissory Note - From CAD to USD for House!

[Axle314 12]

Hoping someone can give some level of guidance.

 

My wife had inherited a large sum of money ( > 500k USD) from her Grandfather out of the EU, however the money's directed to her parents, who live in Canada. It was her grandfather's wish, verbally, that the money be used to help her specifically be able to buy a home.

 

My Father in Law is getting ready to figure all of this out, and for better or worse it's being set up as a Promissory Note held against a property that my wife and I found, for that money. The idea behind it was to set this up as a Portfolio Debt ( whatever that means) to help avoid gift taxes, etc. There are some other reasons for it being set up this way that I can't really get into here. Let's just say, there's a specific reason why he wanted to set it up as a Promissory Note, however I am wondering if that will cause problems.

 

He right now wants it so that he can give us the >500k USD Cash to our Canadian Accounts. Then we can transfer that money to an escrow account as a cash offer for a home we are in escrow for. Since we have to do FBAR regardless, I'm worried that we will by default have to report on the >500k USD transferred into the US Accounts. I'm not a fan of this, and wondering if this move is just applying extra exposure no one would really want.

 

I'm under the impression that if the money was sent to our US Accounts, or rather sent directly to our Escrow Account via wire transfer, and that there are no promissory notes ( meaning, we have a internal loan amongst ourselves only), that there would be much less headaches tax-wise. Part of the concern is if it was sent to the US in that fashion, from Canada to US Escrow account, that money could be considered "In-Situ" and would end up being taxed, unless a W8-BEN was made?

 

I was thinking, if the money was sent to us to our US Bank Accounts, and we report it as a Gift ( to the IRS) while we internally amongst the family still follow the terms of what would have been the Promissory Note, that a lot of tax problems go away.

 

Has anyone had to deal with transferring large sums of money from Canada to the US, or something like that? What's the right way to do it, that has the least amount of exposure / tax implications / that still lets my wife and I be able to have someplace to live for a long while due to this opportunity.

 

Thanks in advance.

[Esme2504 48]

Sounds like you need to consult a CPA.

[Axle314 12]

We have, but we have conflicting responses because Cross-Border taxes are so confusing.

[Alabamak1 688]

@Axle314 i asked a friend and he send me this link www.jrinternational.com  they may be able to answer your question

[Alabamak1 688]

22 minutes ago, Alabamak1 said:

@Axle314 i asked a friend and he send me this link www.jrinternational.com  they may be able to answer your question

sorry it is www.jrtinternational.com

 

[NikLR 13,220]

Try these guys too https://serbinski.com/