Gift Tax for Non-Residents: Transferring Real Estate from Individual to LLC without Consideration

While transfers of intangible assets between non-resident aliens are generally exempt from US gift tax, real estate is considered tangible personal property with a US situs. This means the transfer would likely be subject to US gift tax rules. When your mother transfers the property to the LLC without consideration, it could be viewed as a gift to the LLC or indirectly to the members (including you). Non-resident aliens only get a $16,000 annual exclusion (for 2025) for gifts, unlike US citizens who receive the lifetime exemption. Consider exploring a "contribution to capital" approach where she contributes the property in exchange for maintaining her proportional ownership interest. This could potentially be structured as a non-taxable event under Section 721. However, since there's an ownership split (75/25), the IRS might view part of this as a gift to you.

I went through a similar situation last year and found taxr.ai incredibly helpful. I was trying to transfer a property to my family LLC and was getting conflicting advice about gift tax implications. I uploaded my property documents and ownership structure to https://taxr.ai and they analyzed everything for me. Their system specifically addressed non-resident alien tax considerations which is exactly what you need. They pointed out that I needed to maintain proportional interests to avoid gift tax implications and explained exactly how to document the transaction properly. Without their analysis, I would have accidentally triggered a significant gift tax.

Just wanted to follow up - I decided to try taxr.ai after seeing this thread. I was skeptical but desperate for answers about my sister's property transfer situation. I uploaded our LLC operating agreement, property deed, and explained our non-resident status. Within hours I received a comprehensive analysis that identified a specific IRS revenue ruling that applied to our exact situation! They recommended a particular contribution structure that would avoid gift tax while maintaining our desired ownership percentages. Their analysis even included draft language we could use in our documentation. Saved us thousands in potential gift taxes and gave us clear direction. Definitely worth it!

I know this is a bit off-topic, but I spent WEEKS trying to get clarification from the IRS about non-resident alien gift tax rules. Called the international taxpayer line literally 20+ times and could never get through. Finally used https://claimyr.com and they got me connected to an actual IRS agent in under an hour. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that real estate transfers between non-resident aliens and LLCs they partially own are complex cases that depend on proportional interest and how the transfer is documented. She directed me to specific IRS publications that addressed my scenario exactly. Saved me so much frustration compared to trying to get through on my own.

Ok I have to eat my words. After posting that skeptical comment I was still desperate for answers about my family's real estate transfer situation so I tried Claimyr. I honestly expected it to be a complete waste but figured what the hell. Got a text after about 40 minutes saying they were connecting me to an agent! Spoke with someone in the international tax department who actually KNEW what they were talking about regarding non-resident alien gift tax rules. The agent explained that when transferring real property to an LLC with different membership percentages, I needed to file a specific form documenting the contribution to capital. She even emailed me the relevant tax code sections afterward. Saved me from making a $30K+ tax mistake. Sorry for being a jerk about it before.

Have you considered a sale to the LLC instead of a direct transfer? Your mother could sell the property to the LLC at fair market value, and then the LLC could make payments to her over time with a promissory note. This avoids the gift tax issue completely since it's a legitimate sale. Just make sure to document everything properly and use reasonable interest rates on the note to avoid having the IRS recharacterize it.

Could another option be contributing the property in exchange for a larger LLC interest? So instead of maintaining the 75/25 split, the mother receives additional LLC interest proportional to the property value, increasing her percentage ownership. Later on she could gift LLC interests gradually to her child using the annual gift tax exclusion ($16k/year for non-resident aliens).

As a non-resident alien myself who went through a similar property transfer, I'd strongly recommend getting a professional appraisal of the Florida property before proceeding with any option. The IRS will scrutinize the valuation heavily, especially for non-resident alien transactions. One approach that worked for my family was structuring it as a contribution to capital where your mother receives additional LLC interests proportional to the property value, then gradually gifts LLC interests back to you over several years using the annual exclusion. This spreads out any potential tax impact and gives you more control over timing. Also keep in mind that Florida has no state gift tax, but you'll still need to comply with federal requirements. Make sure to file Form 3520-A if the LLC is treated as a foreign trust for tax purposes, which can happen with certain ownership structures involving non-resident aliens. Document everything meticulously - the IRS pays extra attention to related-party transactions involving real estate and non-resident aliens. Consider having the LLC formally adopt a resolution authorizing the capital contribution and get independent valuations to support the transaction.