UK2toUSA

Hi BE Expats,

Have been in a very stressful situation since morning so thought of asking you experts.

We decided to sell our house in UK before moving to USA so as to avoid the hassle of managing the house from abroad , tenants issues , paying taxes, CGT and what not.. so long story short after month of wait & all the buyer surveys done the buyer have withdrawn this morning due to personal situation . I am really pissed off as we made all our arrangements and plans accordingly for this BIG move (British law is such that neither the estate agents nor the buyer can be hold accountable @~##@) anyways I have to move forward so question for you all is –

I am not sure how soon we will be able to sell our house but we will move to USA by 1st week of September so suppose we sell our house by end of this year or starting of next year.

a)Do we have to pay CGT - I suppose NO I think it kicks in by 2018.
b)Since I will be entering USA as an immigrant (but have already put my house on sell before moving) will I have to pay any taxes to USA government for sale of property in UK as a landed immigrant?
c)When I land do I declare this in any form that I have a property in UK which is on sale currently and I will be moving that money to buy a house in USA.

Please advice .

Many Thanks in advance !!!!

durham_lad

Although it is a long time ago since we did this, we moved to the USA before selling our UK home and didn't buy a new home in the US until we had sold our UK house. Although we had to do the CG calculations when filing our US taxes it was treated as our primary home and the CG was well below the US allowance for CGT.

Not sure of today's rules but am interested in hearing from the more knowledgeable folks here.

Pulaski

a) If you have been living in as your home, no, full stop, under UK taxes.

b) Only if the gain exceeded $500,000 (if you are married and file your taxes jointly, or $250,000 if single and/or file separately) or you have lived in it for less than two (lf the last five) years.

c) no / no need to "declare" it to anyone, .... unless you are carrying it in your luggage! If the proceeds pass through an account in your name in the UK/ anywhere outside the US, then you will need to file an FBAR report with your taxes next year (report all accounts ("account" is very broadly defined) outside the US if in aggregate they had over $10,000 in them at any point during the year.

UK2toUSA

Mr. Pulaski,

Like always many thanks for your valuable inputs. Still require some more inputs on your remarks.

A) OKAY.
B) I am married and we have been living in this house from last 3 years.
Gain exceeded $500,000 = is referred here as profit one makes after clearing bank mortgage and clearing all fees. My gain will be way below $500,000.


One more scenario - Suppose if we are unable to sell the house in 3 or 4 months time due brexit & other market conditions then we will have to rent it out and wait for market to get stable so in this case if we sell the house say after 2018 or 2019 then do I have to pay USA Govt any taxes or rules of $500,000 gain applies the same.

Thanks a lot!

mrken30

CGT will be pro-rated over a 5 year period. This is a useful worksheet.

https://www.irs.gov/businesses/small...state-tax-tips

Pulaski

The $500,000 rule is for properties occupied as your primary home for two of the last five years, so 36 months after you move out of a home you have occupied for (at least) 24 months, then you will be assessable for capital gains tax in the US on the whole gain.

I am not sure of exactly what you can deduct to reach the "net taxable gain", but it does include expenses related to the sale, and any capital expenditure - for example an extension. You should ask your tax accountant whether a major expenditure, like a new kitchen, might also be deductible in reaching net taxable gain.

Cook_County

Although the gain on the sale of the property will be excluded, US law requires that you calculate and report the gain on the repayment of any Sterling mortgage. Because Sterling has crashed post the Brexit vote, if you have a mortgage at all you may find that you have to recognise a sizeable amount of US taxable income. Budget for the tax on this income to be payable by 15 April 2017.

kodokan

Oh yes, this could get quite nasty if you've had the mortgage a long time. Any chance of refinancing before the move, to get a new loan contract 'start date' and therefore hardly any FX movement?