# UK/US CGT query



## biggusmickus (Jun 2, 2021)

Hi
My wife and I are dual UK/US citizens. We jointly own a property in the UK. I would be grateful if anyone could advise on the following situation. I am considering gifting her my share of the UK property so that she owns it outright. As I understand it, possibly incorrectly, this spousal gift has no tax implications between US citizens and so she can own the property outright and for the IRS, that is the end of the matter until disposal of the property. If my wife then returns to the UK and at some stage decides to renunciate her citizenship, not being a covered person, do the US tax authorities have any further interest in that property as she is solely a UK citizen, or can she do with it as she pleases, subject of course to UK tax law. I do intend to speak with a professional tax advisor on this but would like to have a feel for where we stand beforehand. Thank you for any help on this matter.


----------



## Bevdeforges (Nov 16, 2007)

The one possible uncertainty here might be how the full ownership of the UK property would affect her "exit tax" in the event of her renunciation. If she has $2 million in net worth at the time of her renunciation, she would be subject to having to pay the exit tax - as if she sold everything on the date of renunciation.

There are also some stipulations regarding the amount of US income taxes paid over the 5 years prior to renunciation - but the numbers are pretty large.

Anyhow, details are here:





Expatriation Tax | Internal Revenue Service


The expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their residency, if one of the principal purposes of the action is the avoidance of U.S. taxes.




www.irs.gov


----------



## biggusmickus (Jun 2, 2021)

Bevdeforges said:


> The one possible uncertainty here might be how the full ownership of the UK property would affect her "exit tax" in the event of her renunciation. If she has $2 million in net worth at the time of her renunciation, she would be subject to having to pay the exit tax - as if she sold everything on the date of renunciation.
> 
> There are also some stipulations regarding the amount of US income taxes paid over the 5 years prior to renunciation - but the numbers are pretty large.
> 
> ...


Indeed, that was the only potential tripwire that I could see when running through the process, though looking at the three tests to see if she'd be a "covered person" for the exit tax after the transfer, she seems to be ok, as in not covered. In this case, I can't see how the IRS would have any further interest in her but I'll get confirmation from an FA. I'm grateful to you for having another set of eyes look at the situation and proffer an opinion.


----------

