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FBAR, FATCA, and the Returning Expat Home Purchase

FBAR and FATCA are reporting requirements that most expats are already subject to. The real estate intersection comes when funding a US purchase from foreign accounts: every dollar of the down payment traced from a foreign source creates a documentation requirement the real estate transaction must accommodate.

FBAR: The Foreign Bank Account Report

FinCEN Form 114 must be filed annually by any US person with foreign financial accounts with aggregate value exceeding $10,000 at any point during the year. What triggers it: bank accounts, investment accounts, retirement accounts, certain insurance policies in foreign countries. The $10,000 threshold is aggregate across all accounts. Penalties for non-filing: significant. Willful failure: $10,000-$100,000+ per violation. Non-willful: $10,000 per violation. Real estate intersection: the property itself does not trigger FBAR. The bank account used to pay for it likely does.

FATCA Form 8938

FATCA requires US taxpayers with foreign financial assets above certain thresholds to file Form 8938 with their tax return. Expat thresholds: single filers living abroad: $200,000 at year-end or $300,000 at any point. Married filing jointly abroad: $400,000 at year-end or $600,000 at any point. What is reported: foreign bank accounts, investment accounts, pension plans, interests in foreign entities. Key distinction from FBAR: FBAR filed with FinCEN; Form 8938 filed with the IRS. Both may be required for the same accounts.

Funding a US Down Payment from Foreign Accounts

When the down payment comes from foreign accounts, lender source-of-funds requirements apply: (1) Document the foreign account: 12-24 months of foreign bank statements, certified English translation. (2) Document the transfer: the wire record showing funds moving from foreign to US account. (3) Seasoning period: some lenders require funds to sit in a US account 60-90 days before closing. Plan accordingly. (4) CPA involvement: any large transfer from foreign to US accounts should be coordinated with a US expat CPA to ensure it does not create unexpected tax consequences.

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Frequently Asked Questions

What is FBAR and do returning expats file it?

The Foreign Bank Account Report (FinCEN Form 114) must be filed annually by US persons with aggregate foreign accounts exceeding $10,000. Most expats with foreign bank accounts are already subject to this.

Can I use foreign savings for a US down payment?

Yes, with documentation. 12-24 months of foreign bank statements (certified translated), the wire transfer record, and ideally 60-90 days of seasoning in a US account. Coordinate with a US expat CPA before any large transfer.

What is the difference between FBAR and FATCA Form 8938?

FBAR: filed with FinCEN, $10,000 aggregate threshold, covers foreign financial accounts. Form 8938: filed with IRS on your tax return, higher thresholds ($200K+ for expats), covers broader foreign financial assets. Both may apply simultaneously.