Adding my (USC) name to mortgage - tax implications?

My husband and I are remortgaging this year and are having to strongly consider adding my name due to needing to increase the amount we are able to borrow (i.e. just his salary isn't going to allow this).  I have been trying to avoid this because, previously, my tax returns have been incredibly straightforward and I did not want to complicate things.  To say I am a tax novice is probably quite the understatement!

I'm just wondering what the US tax implications may be if our mortgaged property is suddenly also under my name?

Do I now need to worry about filing FATCA?  Do I need to report foreign property if it is our family home (i.e. we are not making money off the property)? Is it just capital gains I might need to worry about if/when we come to sell?

I always previously filed as married, separate as my husband is NRA.  To complicate things, we are potentially looking at moving back to the US in 2-5 years or so.  Should I now consider filing as married, joint?

A bit of background:
- Have been living in the UK since 2012
- Am now dual US/UK national
- Previous tax filings have always been straight forward, with FBAR always filed when threshold was met
- We do not make any money off of this property - it is our home

Please go easy on me, because I honestly have no idea what I'm doing or need to do.  I have been trying to avoid this situation for a while because I'm terrified of filing incorrect tax returns!

Thanks in advance for any help/advice!  Failing that... does anyone know/recommend a US/UK tax adviser I could go to?

Doesn't affect FBAR.

If you sell, you are exempt on the first $250k of profit on the home ($500k if you were filing jointly).  Owning the home does NOT change your tax situation at all.

Here's the tricky bit.  The foreign exchange.  Example:

You bought the house for £100,000.  At the time the USD to GBP was 1:25 to 1.  This means your house was worth $125,000.

When you sell - OR REMORTGAGE - you have to do the foreign exchange calculation again.  Let's say this time your house is *still* worth £100,000.  But now the USD to GBP is 2.0 to 1.  Now this means your house is worth $200,000.  So then the US says you've "made" $75,000 - even though this isn't real money!!!  It's on paper.  That's the one thing to be really cognisant of.

Right now the pound is weak against the dollar.  If we ever see it turn around again, this could become a real situation.  But it's pretty low risk at the moment.

Doesn't affect FBAR.

If you sell, you are exempt on the first $250k of profit on the home ($500k if you were filing jointly).  Owning the home does NOT change your tax situation at all.

Here's the tricky bit.  The foreign exchange.  Example:

You bought the house for £100,000.  At the time the USD to GBP was 1:25 to 1.  This means your house was worth $125,000.

When you sell - OR REMORTGAGE - you have to do the foreign exchange calculation again.  Let's say this time your house is *still* worth £100,000.  But now the USD to GBP is 2.0 to 1.  Now this means your house is worth $200,000.  So then the US says you've "made" $75,000 - even though this isn't real money!!!  It's on paper.  That's the one thing to be really cognisant of.

Right now the pound is weak against the dollar.  If we ever see it turn around again, this could become a real situation.  But it's pretty low risk at the moment.

Thanks for the info, KFD.

Luckily I don't think we will ever be in a position to profit more than the exemption amount so it sounds like nothing would be paid on capital gains.

As for this "profit" you mention in your example... I assume this is just something that needs to be factored in when we come to sell?  So, for instance, say the house was worth £100k and the pound was 1.25:1.  When we come to sell, the house is worth £200k and the pound is 2:1.  So we need to factor in the actual profit made from the house (£100k) along with the change in the exchange rate to show a total/net profit (which could be more or less than the physical profit depending on the exchange rate)?  Just want to make sure I am understanding this correctly.

In terms of filing my taxes every year, nothing changes?

In terms of filing my taxes every year, nothing changes?

Yes, nothing changes. Good luck with your new home.

Yes, nothing changes. Good luck with your new home.

Fabulous -- thank you very much.

Thanks for the info, KFD.

Luckily I don't think we will ever be in a position to profit more than the exemption amount so it sounds like nothing would be paid on capital gains.

As for this "profit" you mention in your example... I assume this is just something that needs to be factored in when we come to sell?  So, for instance, say the house was worth £100k and the pound was 1.25:1.  When we come to sell, the house is worth £200k and the pound is 2:1.  So we need to factor in the actual profit made from the house (£100k) along with the change in the exchange rate to show a total/net profit (which could be more or less than the physical profit depending on the exchange rate)?  Just want to make sure I am understanding this correctly.

In terms of filing my taxes every year, nothing changes?

Here's the tricky bit.  The IRS considers the remortgage - where you've paid off the balance of the previous mortgage and taken out a new mortgage - to be a trigger for the FX.  So technically, this would be reported every 2 years (or however long your fixed term is).

It's annoying to say the least....

Here's the tricky bit.  The IRS considers the remortgage - where you've paid off the balance of the previous mortgage and taken out a new mortgage - to be a trigger for the FX.  So technically, this would be reported every 2 years (or however long your fixed term is).

It's annoying to say the least....

This seems fine.

I suppose my question then would be... if I was not previously on the mortgage, then remortgaging will be the first "trigger event," if you like, that has my name attached to it.  Would I therefore just report the value of the house -- as it is, no increase or decrease in value -- as part of my next tax return?  We are remortgaging later this year.

What form would I use to do this?  (To be honest, I normally use TurboTax as my circumstances are, again, very straightforward -- would TT allow me to do this?)

I don’t think you have to report anything to the IRS at this point, just make a record for yourself of the value of the house, the amount of money borrowed on the mortgage and the exchange rate on the day.

The taxable event will happen on the sale of the house or repayment of the mortgage such as remortgaging the house. At least this is what I think. I have not been through the fx gain  or loss of  repayment of a mortgage, just the selling of a UK house.

Doesn't affect FBAR.

If you sell, you are exempt on the first $250k of profit on the home ($500k if you were filing jointly).  Owning the home does NOT change your tax situation at all.

Here's the tricky bit.  The foreign exchange.  Example:

You bought the house for £100,000.  At the time the USD to GBP was 1:25 to 1.  This means your house was worth $125,000.

When you sell - OR REMORTGAGE - you have to do the foreign exchange calculation again.  Let's say this time your house is *still* worth £100,000.  But now the USD to GBP is 2.0 to 1.  Now this means your house is worth $200,000.  So then the US says you've "made" $75,000 - even though this isn't real money!!!  It's on paper.  That's the one thing to be really cognisant of.

Right now the pound is weak against the dollar.  If we ever see it turn around again, this could become a real situation.  But it's pretty low risk at the moment.

Bit of a cheeky question but if you were to sell your house but the funds from the sale was deposited into an account that didn't have your name on it, how would the IRS know that you've sold your home? Just out of sheer curiosity, would it be because of the change in mortgage itself?

Bit of a cheeky question but if you were to sell your house but the funds from the sale was deposited into an account that didn't have your name on it, how would the IRS know that you've sold your home? Just out of sheer curiosity, would it be because of the change in mortgage itself?

Haven't the slightest idea!  Without question, I'm sure people remortgage every single day without reporting it to the IRS, but just telling the "by the book" rules.

Haven't the slightest idea!  Without question, I'm sure people remortgage every single day without reporting it to the IRS, but just telling the "by the book" rules.

I was just wondering if it’s the mortgage company that would inform IRS or if it’s down to you as the homeowner to be honest about it


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I don’t think you have to report anything to the IRS at this point, just make a record for yourself of the value of the house, the amount of money borrowed on the mortgage and the exchange rate on the day.

The taxable event will happen on the sale of the house or repayment of the mortgage such as remortgaging the house. At least this is what I think. I have not been through the fx gain  or loss of  repayment of a mortgage, just the selling of a UK house.

I don't know why I didn't get a notification of your reply, so I'm sorry for the delay!

Thank you, this is helpful information.  I will be sure to make note of the details you mentioned.

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