Originally Posted by MsElui

mortgage interest is not netted against rental income (from the uk propert) - it can be offset against US taxable income. We have an interest only mortgage in the UK so thats a large amount of relief we can claim.

the american tax consultant told us if we rented in the US - we could claim our UK owned home was our 'main residence' and thus claim the large mortgage relief on that property as an offset againt our US taxable income (so very very very worth doing financially).

If we subsequently bought a home in the US (or became green card holders/would not be returning to the UK) - the US would have to become our main residence and any mortgage interest calculation would be worked out on the us property and not a UK one. We can still own the uk home - but the tax treatment is different if its not your main - only one property at a time can be a main residence for the tax purposes. sure - you can try and hide the uk home from the irs - BUT then you would have to forgoe the potential tax relief it might bring you.

also remember that if you pay off a foreign mortgage whilst in the US (ie sell a uk home) - you can be taxed on the exchange rate difference if there is an exchange rate gain (your tough luck if there is an exchange rate loss).

Originally Posted by lj2

Sounds to me like you would have been better off leaving it in your Mum's name and then her selling it. She could then have gifted you the cash and as long as she didnt die within 6 years.. bingo!

Originally Posted by TRPardoe

What is meant by "Exchange Rate Difference" ?

In my case, there is no mortgage on the house in question in the UK.

Originally Posted by MsElui

mortgage interest is not netted against rental income (from the uk propert) - it can be offset against US taxable income. We have an interest only mortgage in the UK so thats a large amount of relief we can claim.

the american tax consultant told us if we rented in the US - we could claim our UK owned home was our 'main residence' and thus claim the large mortgage relief on that property as an offset againt our US taxable income (so very very very worth doing financially).

If we subsequently bought a home in the US (or became green card holders/would not be returning to the UK) - the US would have to become our main residence and any mortgage interest calculation would be worked out on the us property and not a UK one. We can still own the uk home - but the tax treatment is different if its not your main - only one property at a time can be a main residence for the tax purposes. sure - you can try and hide the uk home from the irs - BUT then you would have to forgoe the potential tax relief it might bring you.

also remember that if you pay off a foreign mortgage whilst in the US (ie sell a uk home) - you can be taxed on the exchange rate difference if there is an exchange rate gain (your tough luck if there is an exchange rate loss).

Originally Posted by TRPardoe

Have done a couple of US forum searches and not found the answer:

It is likely that later this year I shall be selling my house in the UK. It was gifted to me 9 years ago and my Mother has been living there and paying the bills ever since. Now it looks like she will be going into a nursing home for good.

If it remains empty I shall be liable for Poll tax, heat etc. etc. which I cannot afford. The house would need a lot of work to be rentable.

If it is sold, does anyone know the tax implications both in the UK and the USA ?

I am now, officially, a non-taxpayer in the UK.