garfro

Thanks for all the previous advice received from folks on this site ( still not sure I understand it 100%)

As previously posted I am dual citizen UK/US and am now living in UK, my wife is USC with ILR here. We decided to sell our house in California and she has been back at house for several months getting it ready and arranging the sale,
Luckily it sold pretty quickly and we will end up with a decent profit.
Here's my questions.

1. Real estate contract has a section requiring a signature that non US persons have to have the buyer withold 15% of sales price (federal) and 3.33% ( state)
A quick peruse of the Internet shows that this does not apply to US taxpayers ( i.e. Citizens and GC holders) and that RE agents/ escrow companies are oblivious to these requirements and many sellers suffer a witholding that does not apply to them.
It looks like you have 2 options, apply for an exemption certificate which can take several months or sign an affidavit stating you are a US Person/ taxpayer and get it to the escrow company and buyer to stop witholding.
My wife's family give her lots of erroneous advice and are telling her that escrow by law will cut 2 checks to IRS and Ca FTB and disburse the balance to us,and we have to wait until we file to obtain any refund owed.
Can anyone clarify this situation?

2. After sale closes and we receive our funds we intend to leave a percentage of this in our US bank to cover CGT and transfer a large portion to our UK acct while rates are good and purchase a house here with no mortgage.
So my question is...Am I allowed to transfer a large amount and are there any complexities involved with this? The only thing that I can think of is that I fill have to do a FBAR filing. And if so when do I file it, I have never done one before as I have never had more than $10,000 in my UK acct.
Any other red flags to look out for?
Thanks
G

Pulaski

There are no "complexities" you need to worry about transferring the funds, just be sure when making the transfer, whether by on-line FX broker or traditional bank wire, to say in the wire/transfer memo field that it is the proceeds of the sale of your home. Large wires are reported by the banks and FX brokers but that is something they do "behind the scenes" and not something you should concern yourself with because the only people who get burned are the ones who start färt!ng around with the amounts to try to avoid being "reported". Nothing looks more suspicious than someone deliberately trying to avoid being reported!

garfro

Thanks for the quick reply, I think I read on here that it was ok to send whatever amount you want as long as you do the FBAR thing.

Do you know if I am liable for CGT in UK if I pay them in US?
An acct here said say nothing as bank reporting is between US govt and banks, not to HRMC
Would I be better off calling it savings?
G

MidAtlantic

On FBAR filing, yes because your UK account will have more than $10k in it in 2016, you will need to report this on-line here: BSA E-Filing System - Welcome to the BSA E-Filing System. This has to be done by April 15, 2017.

You should also consider whether you need to file a Form 8938 with your 1040. It depends on the value of all your overseas assets. More info here: https://www.irs.gov/businesses/compa...r-requirements

MidAtlantic

For the transfer of funds call it what it is: the proceeds of the sale of your home. That has nothing to do with any CGT liability in the UK, on which others are better informed than me.

garfro

Thanks for that info, had a look.....typical hard to decipher IRS stuff, every CPA I've talked to has a different take on things...go figure !

Now does anyone have info on the FIRPTA thing?

G

Pulaski

I am not familiar with precisely how CGT works in the US, but if you are liable for CGT in the US, which I strongly suspect you are, then you will have a separate CGT calculation to perform in the UK, which will come up with a different number. If the number is less than the US then you will have no further tax to pay, if the number is greater than the US CGT number then you will have to pay the difference.