Transfer of funds from US to UK for property purchase

Hi,

Hopefully a straightforward question, just looking to see if there are any risks/tax implications I need to be aware of.

We are looking to move home in the UK and rather than increase our mortgage/borrowing from a bank, my American parents are ready to lend us a large some of money, c. $200,000 (thanks bank of mum and dad).

I've used Wise many times before to transfer upwards of $40,000, but is there anything to be aware of with a sum of $200k plus?

The money will be transferred from a US account that I share jointly with my mother. There is only c. $5k in that account right now as I mainly just use it when visiting the US, but she will transfer the $200k into that US account from one of her own savings accounts.

Will these transfer raise any eyebrows? Any tax implications to be aware of?

TIA

There should be no tax implications in these transfers though the receiving bank should probably be informed of the incoming funds and where they are coming from.

In 2017 we gifted a similar sum ($150k) to our son to buy a house here in England. He had left the USA and was living with us for 3 months while he bought a house. He had to show proof of where the funds were coming from and so I provided copies of the transaction details of the money coming from our US Vanguard brokerage account to his US bank, HSBC. He then transferred the money to his UK HSBC account to buy his UK house.

The giftee is the one responsible for any taxes or tax reporting, so we reported the gift to the IRS (IRS form 709?).

There should be no tax implications in these transfers though the receiving bank should probably be informed of the incoming funds and where they are coming from.

In 2017 we gifted a similar sum ($150k) to our son to buy a house here in England. He had left the USA and was living with us for 3 months while he bought a house. He had to show proof of where the funds were coming from and so I provided copies of the transaction details of the money coming from our US Vanguard brokerage account to his US bank, HSBC. He then transferred the money to his UK HSBC account to buy his UK house.

The giftee is the one responsible for any taxes or tax reporting, so we reported the gift to the IRS (IRS form 709?).

Only tax consequences will be for your Mum and Dad. As the gift is over the $19k/year/person IRS exclusion for 2025 they will have to record it on Form 709 when they file their 2025 US taxes, but it will only become an issue if they go over the lifetime exclusion of ~$28M for a married couple.

Nowadays solicitors in UK are demanding explanations on where the funds are coming from. So your parent should be prepared to confirm they gifted you money, share their personal information with solicitors, and to explain how they got this money.

This is not a gift. It is a loan. It is a large amount of money. There are significant tax implications in both the US and the UK. You may want to take professional advice.

As far as I know:
If it is a loan, then potential tax consequences are only on the lenders (parents in US) and only in US.
If parties agree on market rate interest, then parents should pay US tax on that interest.
If it is the interest free loan,  AND lenders (children) have no investment income, then US exempts lenders of tax for up to $100,000 loan. (Which in practice could mean up to 400K, if there are two borrowers and two lenders.)
Otherwise, lenders pay tax on "deemed" interest (equal to the market rate).
And there is no formal requirement of lending agreement done by solicitor.
If however it is a gift, again there are no UK tax consequences (since gift givers are not connected to UK), but lenders have to file form 709, gift report, to IRS, and it will count towards their lifetime allowance, which is now about 13 mln per person.
But in either case, when buying a place, solicitors would demand detailed proofs of where funds proceed from.

Also, we transferred sums of the order of 200K and more using Wise and/or Interactive Broker before and no questions were asked. But it is always the best to have all paperwork ready on where the funds come from, just in case.