Spousal Joint Tenancy in U.S. Real Property can cause U.S. Gift Tax
By Alexandre M. Denault, Cantor & Webb P.A. Attorneys at Law
When a married couple purchases real property in the U.S., they typically take title in a form of joint tenancy for a variety of practical and financial reasons without focusing on the U.S. federal tax issues related to the source of funds used for the purchase. When at least one of the spouses is not a U.S. citizen, this can lead to significant U.S. federal gift tax ramifications.
The purchase of U.S. real property by a married couple when at least one spouse is not a U.S. citizen does not trigger the imposition of U.S. federal gift tax regardless of the amount and source of the funds provided by each spouse. Upon the sale or division of the property, however, a taxable gift may occur to the extent that the sales proceeds are not allocated proportionately between the spouses based on their contributions toward the purchase price.
A gift of U.S. real property by any individual to a non-U.S. citizen spouse is subject to U.S. federal gift tax to the extent that the gift exceeds the spousal annual exclusion of $100,000 USD indexed for inflation (2012: $139,000; 2013: $143,000). Accordingly, it is important for spouses and their advisors to consider the U.S. federal tax consequences when purchasing and selling U.S. real property.
Alexandre M. Denault, Associate
Cantor & Webb P.A. Attorneys at Law; Miami, Florida, USA
T: +1 305 374 3886