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  1. Hello, This post was great info. I am in a situation where I would like to gift to my non-citizen non-resident spouse the part that I own (50%) of our residence. When we bought this house in 2010 it was worth $450, now in 2015 it is worth (I would say, and from the city tax evaluation $550K). There is still a mortgage in it for $250K, which she will take on on her name when the gifting is over. So the questions are:
    1) How do you determine the fair-market value of the gift to enter it anywhere in Form 709. My first reaction is to pull it from the current city evaluation tax bill, but is it enough. Is it accurate? Obviously, I would prefer it to be as low as possible, but how do I determine this?
    2) We own this house together (50%/50%), I am assuming the amount of the gift will be 50% of the fair-market value? (in this case 50% of $550)
    3) Now the house has a mortgage in it, should the gift be fair-market-value minus mortgage amount? In this case 50% of ($550-$250).
    4) This question is contextual to the country I live (Canada). Another option is to actually “sell” my part to my partner let say for the sum of $225K (%50 of the $450 property value, maybe higher if needed to be closer to the fair market value). In that case there is no gift, and will have to deal with some of capital gains. However, transaction prices for this are a bit higher. Ans since primary residence in Canada can be sold free of capital gains my partner (which does not need file US taxes) will not have to pay anything when she sells the property later on. Could this last point (capital gains) be less money to the IRS than the gift tax?

    Your input is greatly appreciated,


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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.