U.S. gift tax applies for common law couple?

[TLchap]

I am purchasing a home in BC with my partner, and the two of us are making unequal contributions toward the purchase price. We are recognized as a common law couple in Canada, but we are not registered as domestic partners in a U.S. jurisdiction. Would there be a gift tax obligation in the U.S. (for me as an American citizen) if we title the home as a joint tenancy? Are we considered as spouses in the eyes of the IRS?

[nelsona]

IRS recognizes common-law marriage for tax purposes.

Remember, however, that a US citizen giving to a non-citizen, even a spouse, has limitations.

https://www.irs.gov/businesses/small-bu ... 0liability.

"If your spouse is not a U.S. citizen, tax-free gifts are limited to present interest gifts whose total value is below the annual exclusion amount, which is $164,000 (for 2022) and $175,000 (for 2023). There is no lifetime gift tax credit available to offset tax where such gifts result in a tax liability."

You would be, in essence giving them the amount of down payment to make the down payment 50-50, if you are making the house owned 60-50.

[TLchap]

Thank you for your reply and the helpful link!

Am I correct in understanding that there is no need to file a Form 709 as long as the difference between our contributions is less than the exclusion amount (or if we opt for a TIC title with shares proportionate to our respective contributions)?

[nelsona]

I wouldn;t be 100% sure about your second option. since this might make part the house's value what is considered as the gift.

Example:

$1.000,000 home. You put $200K, they put $100K. If you split the house 50-50, then, is essence, you are gifting them $167K: 500K they now own minus the 333K they contributed toward. In my opinion, it would be safer to give them $50K and go truly halfsies on the house.

I'll let you look at the regs for 709.