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Old 13.05.2011, 14:30
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transferring title in house to husband - tax issues?

I'm hoping for some advice here ...

My situation is as follows: My DH (UK citizen) and I (US citizen) bought a house in Vaud about 7 years ago in joint ownership. First of all, our deed actually states that because I am a US citizen, it has to be my primary residence. So, question 1: does that mean we can't rent the house out if we move? Or can DH rent it but I can't? Confusing!

Secondly, it seems to me that if we sell the house, I may end up with some US taxable income thanks to exchange rates. Leaving aside whether we manage to sell at a CHF profit over our purchase price, even if we sell at the purchase price in CHF, in US terms it would show a profit on the sale due to the weak dollar. Am I right? And, if so, would it be a good idea to transfer my share of ownership to my DH so that he has 100% ownership? That would help if we decide to rent, and also help if I am right about US tax liability. But, does that create a Swiss tax liability for him if I transfer for "free" - i.e., he has received a big gift from me?

Anyone with any insight to share would be really appreciated.
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Old 14.05.2011, 00:19
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Re: transferring title in house to husband - tax issues?

Caveat - take my comments with a grain or three of salt. I am not a tax professional, only a bored housewife - and there is only so much of the US tax code I can wade through before my eyes start to glaze over and my head spin.


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Secondly, it seems to me that if we sell the house, I may end up with some US taxable income thanks to exchange rates. Leaving aside whether we manage to sell at a CHF profit over our purchase price, even if we sell at the purchase price in CHF, in US terms it would show a profit on the sale due to the weak dollar. Am I right?
We are in this position now; selling now even at the CHF price for which we purchased the house 8 years ago means that in the eyes of the IRS we have a rather large capital gain in USD terms.

But, having panicked over this exact issue only a few days ago, I just remembered the exclusion. It may not be that bad. I am fairly sure that the exclusion is applicable to overseas property used as a primary residence as well as to US property. So you should be off the hook for at least the exclusion amount, meaning you'd only be taxed on the remainder. (The exclusion is 500K per couple, single person 250K. If only one of you is a US taxpayer I'm not sure which applies.)

Unfortunately, given the abysmal dollar that exclusion may not go as far as it sounds at first... It won't cover our paper USD gain even selling at no CHF gain. But it does make the hit less painful.

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And, if so, would it be a good idea to transfer my share of ownership to my DH so that he has 100% ownership? That would help if we decide to rent, and also help if I am right about US tax liability.
That is a question for a tax professional.

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But, does that create a Swiss tax liability for him if I transfer for "free" - i.e., he has received a big gift from me?
I believe that you can give a gift to a spouse without tax consequences - but I make that statement based on my hazy recollection of a conversation I had with the Gemeinde notary (in SZ) many years ago when I toyed with the idea of changing our home ownership. I also believe that I remember some kind of title-changing fee would be charged, but I don't think it was a terribly significant amount. At least in SZ.

But please check on this for yourself - my memory may be at fault, and I have no idea if there is a cantonal difference here. The notary should be able to answer questions re: Swiss tax consequences, at least in broad terms.


Good luck!


(Should any helpful tax professional - or somebody with better comprehension of IRS-speak than I have - happen by, please let me know if I'm talking nonsense. )

Last edited by meloncollie; 14.05.2011 at 08:19.
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Old 16.05.2011, 13:09
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Re: transferring title in house to husband - tax issues?

manythanks - caveat noted, but it's helpful to have this general direction - is the "exclusion" you mentioned one that applies to any US house seller or to expats?

In any event, I have asked our Swiss tax consultants to look into the Swiss side and will do the same with the US tax advisors - will post back here if I get any useful info.
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Old 16.05.2011, 13:31
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Re: transferring title in house to husband - tax issues?

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manythanks - caveat noted, but it's helpful to have this general direction - is the "exclusion" you mentioned one that applies to any US house seller or to expats?
It's the standard exclusion available to all US house sellers. Here is the general IRS factsheet:

http://www.irs.gov/pub/irs-pdf/p523.pdf


BUT - do speak with a pro. I've really only begun to research this, and am not at all certain that I understand the issues fully.
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Old 16.05.2011, 13:35
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Re: transferring title in house to husband - tax issues?

thanks - and understood!
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