Newspaper article The Evening Standard (London, England)

The Taxman's Eagle Eye; Homes & Property Lawyer Henry Stuart Answers Londoners' Queries

Newspaper article The Evening Standard (London, England)

The Taxman's Eagle Eye; Homes & Property Lawyer Henry Stuart Answers Londoners' Queries

Article excerpt

Byline: HENRY STUART

Q: I am from America, but have been living in London for a long time.

I am getting married soon and want to put the house I have owned for a number of years into our joint names and make other provision for my wife. However, I am told that this may give me tax difficulties. Will a simple gift of my house and other money really do this?

A: When a US citizen marries someone who is not American, care needs to be taken both in planning lifetime gifts and in dealing with your estate in the event of death.

There is no upper limit on gifts made between American spouses, so they are free to give each other any amount of money without paying tax on it. But when only one partner is a US citizen, the US Internal Revenue Service sets an upper limit for tax-free annual gifts. This amount is indexed for inflation each year and at the moment is $117,000 ([pounds sterling]64,073). As you are not yet married, you need to be aware that the amount that may be gifted to a non-spouse tax-free is also indexed for inflation and is now stands at $11,000 ([pounds sterling]6,021).

Before making any gifts, either before or after marriage, you should check that they fall within this limit and, if possible, space the gifts out over several years, keeping within this limit.

You propose to make provision for your wife, and this may require special planning to deal with any tax issues that may arise on your death.

As with the UK, there is usually no tax to pay until the death of the survivor, but it is more complicated when one spouse is not a US citizen.

Most Americans will be subject to UK inheritance tax, but the rules may be affected by how long you spend in this country as that can affect your tax status. This is complicated area and you should take professional advice before making gifts or bringing money into the UK. …

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