Avoiding US capital gains on sale of UK home

I am buying a home with my spouse (only UK citizen).  I'd like to avoid capital gains tax problems on a future sale.  So we'd like to put the new home in her name only.  But here's my question.  We are selling a jointly owned property (50% ownership for each of us).  The proceeds of this sale will go towards buying our new home.  Would I have to gift her my proceeds in order to put the new house in her name?

Being married I don’t think there is any gift tax issue to worry about, but I may be wrong. For tax reasons I took my name off our joint investment accounts back in 2015. If that constituted a gift then I failed to file US gift tax form 709.

There is a limit to how much you can gift to a non US spouse in a given year.  In 2020 it was $157,000.  As long as you stay under that you are fine.

There is a limit to how much you can gift to a non US spouse in a given year.  In 2020 it was $157,000.  As long as you stay under that you are fine.

Then simply file the excess using IRS form 709.  You have a lifetime tax free exemption of over $11m so it is not a big deal.  In the UK even if there was a limit of how much you can give to your spouse, then after 7 years it completely goes away and never has to be recorded in your estate when you die.

I once filed an IRS 709 for a gift to our son to help buy a house, and it is easy enough.

Very sorry to not start a new thread and bump an old post but I can’t for the life of me see a new post button on mobile version of forums… any help thankfully received!


Re this topic, I am a USC married to UKC and in June of 2016… the day of the Brexit vote … we bought a flat in London jointly for about £400k. The price hasn’t moved much due to covid etc.


At the time we didn’t realise about the CGT on USC selling property. We are now considering either selling or renting out the property (We will be living rent-free in my parents’ holiday home either way). If we do rent it out we will look to sell in a few years when some local regeneration projects are completed.


So my question is around the tax implications… is it best to transfer my share in the property if I’m going to rent it out so that I don’t have to pay tax on rental income? Is the transfer considered a gift and would still be subject to some CGT? I think by renting it out and no longer using it as our main residence we would become subject to more UK tax on it when we come to sell it - similar for US tax?


If we do sell, is it better to transfer my share first or it doesn’t make any difference from a CGT perspective?


Thanks!

I think taking your name off the title would work well, and should you choose to rent later only your wife will be subjected to tax in the UK, and you won’t be subject to tax in the US.

However, this is your primary home so if you sold now then any CG would be reported on your US taxes but you wouldn’t be taxed as it is bound to be below the CG limit for a primary home. A new home could then be purchased in your wife’s name.

I’m not a tax expert and I’m sure I’m missing stuff such as complications around mortgages and exchange rates if flat is mortgaged. Hopefully someone will come along who knows this stuff.

Thank you!

Luckily (?) the flat is owned outright rather than mortgaged so at least the exchange rate part should be okay.

I can’t for the life of me see a new post button on mobile version of forums… any help thankfully received!

There's an app you can get (I think it's free) called Tapatalk that lets you access this forum and others from mobile.  The interface is pretty good.  Might be worth looking into if you use this site on mobile a lot. 

Very sorry to not start a new thread and bump an old post but I can’t for the life of me see a new post button on mobile version of forums… any help thankfully received!

There's an app you can get (I think it's free) called Tapatalk that lets you access this forum and others from mobile.  The interface is pretty good.  Might be worth looking into if you use this site on mobile a lot. 

If you prefer to skip the app, your "start new topic" button is here:



It should appear at the top of each forum.

Thank you very much both!!