The direct answer
If your parents are nonresident aliens and they give you money toward your U.S. home, it is a foreign gift to you. It is generally not taxable income. Whether you must report it depends on the total: if gifts from your parents and foreign persons related to them come to more than $100,000 in the tax year, you file Form 3520 Part IV.
Buying a home doesn't create a special category. The down payment is counted with every other gift from the same family that year.
First question: what is the money, really?
Families often help with a home in different ways. The tax treatment follows what actually happened, not what the transfer is called.
| Arrangement | What it usually is | Form 3520 Part IV? |
|---|---|---|
| Parents give you money with no expectation of repayment | A gift to you | Counts toward the $100,000 related total |
| Parents pay the escrow or seller directly for your home | Paying escrow directly does not by itself take it outside foreign-gift reporting; substance and ownership matter | Needs a fact-based review, especially for large amounts |
| Parents lend you money and you will repay it | A loan, not a gift | Not reported as a gift; loan rules apply |
| Parents put their own name on the title as co-owners | Their own investment, not a gift of that share | Needs professional review |
| Money comes from a parent's company or a trust | Not an ordinary individual gift | Different rules — get professional help |
The direct-payment exception identified in the IRS foreign-gift guidance concerns qualified tuition and medical payments made on your behalf. It is not a general exception for housing. The IRS guidance we reviewed does not specifically address parents paying an escrow company, a seller, or a mortgage lender, so paying escrow directly does not by itself establish that the money falls outside foreign-gift reporting. The intended beneficiary, who owns the home, and the actual transaction facts matter. For a large direct-to-escrow arrangement, get individualized review.
Reporting vs. tax: keep them apart
- Income tax: a true gift is generally not included in your income. You do not pay U.S. income tax because your parents helped you buy a home.
- Reporting: Form 3520 Part IV is an information return, filed separately from your Form 1040, when your related total is more than $100,000 for the year.
- Later income: if you rent the home out, the rent is taxable. When you sell, any gain is figured from your basis — generally your purchase cost, including the part paid with gift money.
A worked example
Lin and her husband, both U.S. citizens, buy a home in San Jose in 2025. Lin's parents, who live in Taichung and are not U.S. citizens or residents, wire $150,000 to Lin's U.S. account in April for the down payment. In December they send another $10,000 as a holiday gift.
- The money is a gift to Lin; it is not taxable income.
- Lin knows her mother and father are related to each other, so under the aggregation rule she adds their gifts together: $160,000 for 2025 — more than $100,000 — so Lin files Form 3520 Part IV for 2025, listing both gifts (each is over $5,000).
- If the parents had instead sent $80,000 to Lin and $80,000 to her husband, the analysis of who received what — and whether one spouse was really receiving for the other — would need a closer look. See our guide for married couples.
Documentation and source of funds
Two different parties may want to see where your down payment came from, for two different reasons:
- Your mortgage lender may ask for a gift letter, bank statements, or wire records to document the source of your funds. That is a lending requirement, not an IRS filing.
- The IRS cares whether the money was a gift and, if your related total is over $100,000, whether you filed Form 3520. If a foreign gift is not reported, the IRS may decide the income tax consequences of the money itself.
The same documents help with both. Gather them while the purchase is fresh:
- Wire confirmations showing the date, amount, sender, and receiving account
- A signed statement from your parents that the money is a gift with no repayment expected
- The exchange rate used to convert the amount to U.S. dollars
- Your closing statement showing how the funds were applied
- If the money passed through your own foreign account first, that account's statements
If your parents move the money into an account in your name outside the U.S. before you bring it over, that account is your foreign financial account. If your foreign accounts together exceed $10,000 at any time during the year, an FBAR is required, and Form 8938 may also apply. See Do I need to report a Taiwan or foreign bank account?
Common mistakes
- Assuming the lender's gift letter takes care of the IRS side
- Counting only the down payment and forgetting other gifts from the same family that year
- Calling a gift a "loan" (or a loan a "gift") without the facts to support it
- Assuming that because the money went to escrow instead of to you, it automatically falls outside Form 3520
- Missing Form 3520 because it is not part of the Form 1040 your preparer files
When professional review makes sense
Talk with a CPA or tax attorney if your parents will be on the title, if the help is a loan or partly a loan, if money comes from a family company or trust, if the gift went to you and your spouse in some combination, or if you already missed a Form 3520 deadline (see I filed Form 3520 late — what should I do now?).