Adding non-US spouse to UK mortgage / deeds

Hi all,

I am a US / UK dual citizen married to a UK citizen.

We are looking at buying a flat. For a number of reasons the bank will only do it my name. We would want to then change both house and mortgage to joint names, probably within 2 years when the first mortgage term is up for renewal.

What are the US tax implications of doing this? (What should I look up). I saw that gift tax is applied to the giver, but if she was a US citizen then it would be exempt. Since she is non-US I have seen that it is "more complicated" but not sure of the details?

It looks like there is an exclusion of $145k. This would very likely be enough to cover the half of the property. But would we have to get the property revalued or could we use the sale price (if it was 2 years ago)? What if we did it not exactly half - ie if we have a UK property agreement that says it is not a 50-50 split but still in joint names (because I provided the deposit) - would the IRS accept something like that?

Any advice or links to information on this would be appreciated.

Hi, Thropere, I am the NRA spouse of a former US citizen (recently renounced).  We are both retired and so different circumstances from you, but our experience might give you something to think about.

Ownership of property
•   We live in London and bought our house jointly (joint mortgage) in 1970 (!).
•   Because of the obscene property prices in London the value of our modest terrace house took him perilously near to being a “covered expatriate” – subject to the exit tax.
•   This is because the IRS insists that the whole value of jointly owned assets must be included – unless you can prove that the spouse contributed.

While you are obviously not considering renunciation and are far from retiring, I suggest that you look into the “joint tenancy” option as well as “joint ownership”, which I also explored.

•   Joint ownership – you own the property together;  if one spouse dies the other automatically owns 100%.  The total amount has to be given to IRS (for renunciation
•   Joint tenancy – each spouse owns only the agreed proportion of the property.   This is normally 50/50 but other percentages can be agreed.
•   You would need to get a (UK) solicitor to draw this up.
•   Whatever you do, make sure you have documentary evidence to support the “split” in ownership – or the contribution that your wife made to the purchase of your property.

You can do some online research by yourself but I think you should probably take some professional advice on this.  It would be good for you to get things set up in the best way for both sides of the Atlantic rather than wait until we did.  I spent hours reading and digging through our ancient mortgage papers to find stuff to “prove” that I contributed to the purchase of our house!!

You’re right about the gifting option.  As I understand things, it doesn’t have to be declared to the IRS if it’s below the spouse tax-free limit.  But, again, I would recommend that you keep records of dates of the “gifting”.  If it were me, I would devise some sort of document that you sign and date and that you get “witnessed” and dated by a friend.  Just something that could – if necessary -stand up to scrutiny further down the line.  But I'm a "belt and braces" woman and others may think this is OTT!

I hope this is of some help.