Does a real estate transaction require FBAR reporting?
Moderator: Mark T Serbinski CA CPA
Does a real estate transaction require FBAR reporting?
If someone buys or sells property and makes a deposit (or receives funds) to or from what I suppose would be a realtor's or lawyer's trust account, would this require reporting on a FBAR (and possibly as a trust account), and if so, how would you get the necessary information, as I would doubt a Cdn lawyer or realtor would to provide private financial info to the IRS or US Treasury.
To my knowledge you would report the account the funds were transferred to.
An example would be you sell your house and the lawyer divides the funds up accordingly...paying the bank out the MTG owed, closing fees etc, then deposits the rest into your savings account.
If your savings account increased by 200k following the sale...and then the funds were transferred out to buy another property the next day/week...you would report the 200k value for that account on your FBAR
If the funds in question are held in 'escrow' or in 'trust' then you do not have signature authority over said account until the title is clear...therefore it is not reportable (only accounts you have signature authority on do you report).
I would be more concerned with the capital gains you made on the sale and ensure it lines up with your 1040.
An example would be you sell your house and the lawyer divides the funds up accordingly...paying the bank out the MTG owed, closing fees etc, then deposits the rest into your savings account.
If your savings account increased by 200k following the sale...and then the funds were transferred out to buy another property the next day/week...you would report the 200k value for that account on your FBAR
If the funds in question are held in 'escrow' or in 'trust' then you do not have signature authority over said account until the title is clear...therefore it is not reportable (only accounts you have signature authority on do you report).
I would be more concerned with the capital gains you made on the sale and ensure it lines up with your 1040.
Thanks Mach7, for the most part I agree, but I am concerned as to whether an account with a lawyer or realtor would be considered "having a financial interest".
From the TDF90 instructions:
Financial Interest. A United States person has a financial interest in a
foreign financial account for which:
(1) the United States person is the owner of record or holder of legal
title, regardless of whether the account is maintained for the benefit of
the United States person or for the benefit of another person; or
(2) the owner of record or holder of legal title is one of the following:
(a) An agent, nominee, attorney, or a person acting in some other
capacity on behalf of the United States person with respect to the
account;
From the TDF90 instructions:
Financial Interest. A United States person has a financial interest in a
foreign financial account for which:
(1) the United States person is the owner of record or holder of legal
title, regardless of whether the account is maintained for the benefit of
the United States person or for the benefit of another person; or
(2) the owner of record or holder of legal title is one of the following:
(a) An agent, nominee, attorney, or a person acting in some other
capacity on behalf of the United States person with respect to the
account;