Tax/Money Questions!

Hiya!

My hubby and I are in the process of saving up for a down payment on a house.  We currently have an ISA in his name and are rapidly approaching it's yearly maximum and want to set up one in my name. How does this work with the US Govt as far as taxes on interest? Is it the same as income tax in that you don't have to pay if you earn less than $80k?

Also, what about if we were to sell any joint property here in the UK? By property, I mean the big stuff- like a house! We think it is in my best interest to have me on the mortgage, but I'm assuming the US Govt will always want a piece of the action even if we never live in the US again!

Does anyone know how this works for US Citizens married to UK Citizens and living in the UK? Or- any idea where I can find out?

Thanks!

I have an add-on question.  How about buying a house in the UK?  Would it be simpler, tax-wise, if my name doesn't go on the mortgage and we just keep it in my DH's name?  I really want to keep my US tax situation as simple as possible and don't want to deal with anything extra!

Hi Lolabola

In terms of your questions about ISA, this is not a tax free vehicle in the US, therefore the interest, dividend generated on this account will be taxable in the US. THis does not come under the $80,000 exclusion as it is investment income (and not earned income).

In terms of selling your house, if you are married to a UK citizen, when you sell the house you may have to report half of it on your US return. However if the house is your principal residence and your portion of the gain is $250,000 or less nothing is to be reported on your US return. The rules sorrounding sale of houses are complex, therefore I would need more information to answer your question properly. Therefore you can call me on 0208 466 9297 if you like to discuss this further.

Helen