Gifting non-US assets to an NRA spouse

I’m an American who has lived in the U.K. for over 40 years with no US assets or bank accounts. I am interested in gifting to my British spouse, including back dating to previous tax years if possible. I have a principal residence in a London suburb and a holiday home in Cornwall and I would like to protect the value should I decide to sell either property. I know that the IRS rules are totally different from being a domestic American with a domestic spouse. I would be grateful for any advice or recommendations about where to get clear and understandable information. Thank you in advance.

It is standard tax planning to sever a joint tenancy, gift a large percentage to a non-resident alien spouse and file a US gift tax return. Seeing the size of the transaction, one would involve a specialist tax lawyer.

Dear Guya,

Thank you for the information. I guess that I need to find a specialist tax lawyer. Do you have any recommendations? I am not a “high net worth” person by the way - however my principal residence in London will have increased in value since 2010! I have never gifted to my UKC spouse so wondering if it’s possible to add gifts to previous tax years.

For what it’s worth, I was advised by my tax planner (I am a usa citizen living in the uk with British spouse) that I gift the house over a number of years until I hold around 10% Of it.  I gifted the max you can gift a spouse without reporting, and just logged the gifts with my will.  We are now at a 90-10 split so we are changing the uk land registry and Will accordingly. This will minimise uncle sam’s over reach if I die.  I didn’t report it on my gift transfer form as I kept it within the amounts you can gift an nra spouse. 

Thank you Tinag, this is very helpful. I think that I need to find a tax advisor. I’m not sure how to find one. Most of the professional tax planners and tax preparers seem to assume that Americans abroad are “high net worth”  individuals which is certainly not the case with me!

I was in the exact same place….  Lived here 25 yrs, did the Feie because it was easy….  However then my Parents died, inheritance and I was given 60:days to get my parents iras sorted and out of the USA….   It was a mess.  It will be worth having someone.  I ended up with a dual qualified ifa in london, and a tax guy.  I’d go with a good not online tax firm first if I were you. I then reverted to doing my own and kids’ when I got the hang of it.  I could only find an ifa after the inheritance, due to minimum thresholds. 

For what it’s worth, I was advised by my tax planner (I am a usa citizen living in the uk with British spouse) that I gift the house over a number of years until I hold around 10% Of it.  I gifted the max you can gift a spouse without reporting, and just logged the gifts with my will.  We are now at a 90-10 split so we are changing the uk land registry and Will accordingly. This will minimise uncle sam’s over reach if I die.  I didn’t report it on my gift transfer form as I kept it within the amounts you can gift an nra spouse.

Hi Tinag,

When transfering ownership over a number of years, how did you determine the percentage to transfer each time so that the value transfered was within the gift allowance?  Did you have your property valued each time by an estate agent, or did you use some other method?

And to change the percentage of ownership, was this done by having your property owned as 'tenants in common'?

Thanks, Alan

Hi Alan,

Excellent questions. It would be nice to have the answers to these questions!

Regards,

Penelope

Sorry, didn’t see this, Alan. I just had the property valued online and kept the email responses.  And yes, we now own the house as tenants in common