Paying money back to U.K. Bank account from USa
#16
Re: Paying money back to U.K. Bank account from USa
There's no right or wrong answer, just what works out best for you. Good luck with the move!
#17
Re: Paying money back to U.K. Bank account from USa
Paying off a capital and interest mortgage (and not selling the property you had the mortgage on) wouldn't attract a US tax liability, would it?
I mean it's a simple loan and the final payment is just like any of the ongoing payments apart from the fact you don't have another one coming next month. Or am I being incredibly naive? The mortgage was taken out 12 years before moving to the US.
I mean it's a simple loan and the final payment is just like any of the ongoing payments apart from the fact you don't have another one coming next month. Or am I being incredibly naive? The mortgage was taken out 12 years before moving to the US.
Last edited by stephend-; Jan 30th 2018 at 2:00 am. Reason: typo
#18
Re: Paying money back to U.K. Bank account from USa
Paying off a capital and interest mortgage (and not selling the property you had the mortgage on) wouldn't attract a US tax liability, would it?
I mean it's a simple loan and the final payment is just like any of the ongoing payments apart from the fact you don't have another one coming next month. Or am I being incredibly naive? The mortgage was taken out 12 years before moving to the US.
I mean it's a simple loan and the final payment is just like any of the ongoing payments apart from the fact you don't have another one coming next month. Or am I being incredibly naive? The mortgage was taken out 12 years before moving to the US.
Googling the topic brings up a range of articles that explains more detail.
#19
Re: Paying money back to U.K. Bank account from USa
But here is the interesting tact to play with the IRS.
In the US you can offset your mortgage interest as tax relief on your income tax. In the UK, this practice stopped many decades ago.
In reality, this means that typically, if you have held a mortgage in the UK for 25 years you will have paid the value of the original house purchase price again in interest payments - i.e. the Asset has cost you a lot more than the initial purchase price as well as any improvements (like extensions,, new roof etc.) that you may have paid out to improve or maintain the value of the Asset. Again, in the UK you can't claim the tax relief against mortgage interest BUT in the US you can.
If you read through the IRS rules on claiming tax relief on the buying, constructing and improving your home you won't find any distinction between an US or Foreign property.
Therefore, in theory you could / should be claiming that mortgage interest against your US income. IF you could get away with taking back 25 years of interest you will find you probably have no CGT. IRS aren't going to like that but you may be able to agree on something like a 6 years period.
Depending on your IRS tax bracket you fall under too.
But in my battles with the IRS I put it plainly - if you want to hit me on CGT on a foreign asset, even though I am not a US resident (at the time - on a work visa) then I want ALL IRS rules to apply re that asset. This was the discussion I had with then over several months - AND, crucially, before I went ahead a sale.
In the end, I didn't sell because I knew I was going to be coming back to the UK within 12 months. But it's worth having that discussion.
In the US you can offset your mortgage interest as tax relief on your income tax. In the UK, this practice stopped many decades ago.
In reality, this means that typically, if you have held a mortgage in the UK for 25 years you will have paid the value of the original house purchase price again in interest payments - i.e. the Asset has cost you a lot more than the initial purchase price as well as any improvements (like extensions,, new roof etc.) that you may have paid out to improve or maintain the value of the Asset. Again, in the UK you can't claim the tax relief against mortgage interest BUT in the US you can.
If you read through the IRS rules on claiming tax relief on the buying, constructing and improving your home you won't find any distinction between an US or Foreign property.
Therefore, in theory you could / should be claiming that mortgage interest against your US income. IF you could get away with taking back 25 years of interest you will find you probably have no CGT. IRS aren't going to like that but you may be able to agree on something like a 6 years period.
Depending on your IRS tax bracket you fall under too.
But in my battles with the IRS I put it plainly - if you want to hit me on CGT on a foreign asset, even though I am not a US resident (at the time - on a work visa) then I want ALL IRS rules to apply re that asset. This was the discussion I had with then over several months - AND, crucially, before I went ahead a sale.
In the end, I didn't sell because I knew I was going to be coming back to the UK within 12 months. But it's worth having that discussion.
#20
Re: Paying money back to U.K. Bank account from USa
But here is the interesting tact to play with the IRS.
In the US you can offset your mortgage interest as tax relief on your income tax. In the UK, this practice stopped many decades ago.
In reality, this means that typically, if you have held a mortgage in the UK for 25 years you will have paid the value of the original house purchase price again in interest payments - i.e. the Asset has cost you a lot more than the initial purchase price as well as any improvements (like extensions,, new roof etc.) that you may have paid out to improve or maintain the value of the Asset. Again, in the UK you can't claim the tax relief against mortgage interest BUT in the US you can.
If you read through the IRS rules on claiming tax relief on the buying, constructing and improving your home you won't find any distinction between an US or Foreign property.
Therefore, in theory you could / should be claiming that mortgage interest against your US income. IF you could get away with taking back 25 years of interest you will find you probably have no CGT. IRS aren't going to like that but you may be able to agree on something like a 6 years period.
Depending on your IRS tax bracket you fall under too.
But in my battles with the IRS I put it plainly - if you want to hit me on CGT on a foreign asset, even though I am not a US resident (at the time - on a work visa) then I want ALL IRS rules to apply re that asset. This was the discussion I had with then over several months - AND, crucially, before I went ahead a sale.
In the end, I didn't sell because I knew I was going to be coming back to the UK within 12 months. But it's worth having that discussion.
In the US you can offset your mortgage interest as tax relief on your income tax. In the UK, this practice stopped many decades ago.
In reality, this means that typically, if you have held a mortgage in the UK for 25 years you will have paid the value of the original house purchase price again in interest payments - i.e. the Asset has cost you a lot more than the initial purchase price as well as any improvements (like extensions,, new roof etc.) that you may have paid out to improve or maintain the value of the Asset. Again, in the UK you can't claim the tax relief against mortgage interest BUT in the US you can.
If you read through the IRS rules on claiming tax relief on the buying, constructing and improving your home you won't find any distinction between an US or Foreign property.
Therefore, in theory you could / should be claiming that mortgage interest against your US income. IF you could get away with taking back 25 years of interest you will find you probably have no CGT. IRS aren't going to like that but you may be able to agree on something like a 6 years period.
Depending on your IRS tax bracket you fall under too.
But in my battles with the IRS I put it plainly - if you want to hit me on CGT on a foreign asset, even though I am not a US resident (at the time - on a work visa) then I want ALL IRS rules to apply re that asset. This was the discussion I had with then over several months - AND, crucially, before I went ahead a sale.
In the end, I didn't sell because I knew I was going to be coming back to the UK within 12 months. But it's worth having that discussion.
But if you were outside the US you would claim the annual foreign earned income exemption, and credit for any tax paid outside the US, and it is unlikely you would owe any tax, even without deducting mortgage interest. So what would you deduct the mortgage interest against? .... You can't deduct mortgage interest from a capital gain!
#21
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,865
Re: Paying money back to U.K. Bank account from USa
If you want the interest relief you need to file the tax return, so for years that you "omitted" to claim tax relief on the interest you would need to file amended, or in-arrears returns, and you would need to include your income for those years.
But if you were outside the US you would claim the annual foreign earned income exemption, and credit for any tax paid outside the US, and it is unlikely you would owe any tax, even without deducting mortgage interest. So what would you deduct the mortgage interest against? .... You can't deduct mortgage interest from a capital gain!
But if you were outside the US you would claim the annual foreign earned income exemption, and credit for any tax paid outside the US, and it is unlikely you would owe any tax, even without deducting mortgage interest. So what would you deduct the mortgage interest against? .... You can't deduct mortgage interest from a capital gain!