durham_lad

Our daughter is going to be moving to England later this year from California and has a house to sell. I told her that it would greatly simplify things if her house sale was completed before moving.

IF the sale completes after she is in England and tax resident in England what are the tax implications if any? There is no mortgage, this is her primary residence, and the only house she owns. She won’t be buying a house in England until after the sale of her US house completes.

Expatrian

Stateside she’ll have the $250k single / $500k married capital gains exemption if she’s lived in it the last 3 years, if I recall correctly. It might beneficial for her not to move to the UK until April 6 or later to avoid the split-year tax treatment thing. Another thing to look might be to consider her domicile of origin status; this could work for her or against her from what I’ve gathered from researching that quite a bit recently.

durham_lad

Thanks for that I’ll pass the info onto her. I’ll tell her to collect together all the receipts for the improvements she has made such as installing A/C.

She will be using a dual qualified tax preparer for the first year at least so she can ask about non-dom status the first year. Does a non-dom still qualify for NHS? I’m sure she’ll have private insurance anyway.

Expatrian

Actually, according to the IRS site:

Qualifying for the Exclusion

In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. Refer to Publication 523 for the complete eligibility requirements, limitations on the exclusion amount, and exceptions to the two-year rule.


I believe NHS coverage is based on legal residence. But can she claim non-dom? Even if she was born in the US, if you were born in the UK, even with you possibly having a domicile of choice in the US at that time, by you returning to the UK to live, I think you would be considered never to have lost your UK domicile of origin. That means by her moving to the UK, she will now be considered to have a UK domicile of origin, meaning no non-dom status for her (I am not an expert in any of this stuff, so please take don’t my opinions as advice)?

A resource from my recent research:

https://htj.tax/2021/10/moving-to-th...-a-uk-citizen/

Edit: The above assumes you WEREN’T able to achieve a domicile of choice in the US at the time she was born, perhaps due to your continuing ties to the UK. But regardless, if you daughter is giving up the US as her foreign domicile, she’ll be considered domiciled in the UK once she becomes resident in the UK (IMO). Probably worth getting some pro tax advice if there’s a lot of capital gains on the line.

durham_lad

I think she bought her house late 2017, certainly by early 2018, and has lived in it exclusively so she should meet those requirements.

If the house is indeed sold before she moves over then I doubt she would even have a shout at non-dom status since she was born in England, as were we, and she has lots of family ties here. The company she works for is based in California but has offices in England with employees (Reading and Brighton) so she will be paid by a company registered and operating in the UK.

Expatrian

Agreed. Being born the UK additionaly, she’ll be considered “formerly domiciled resident” for sure and immediately be subject to income and capital gains tax on her worldwide income and capital gains, upon return. This stuff is enough to make your head spin 🤪

durham_lad

Yes, that is what I’m thinking as well.

Brightongirl

We plan to sell our Florida home before we move to the UK but always though there was a possibility the sale might not got through until after the move. It never occurred to me that we might have to pay UK taxes on the proceeds of sale!! So just to keep things simple and save a ton of money, if we finalize the sale before we move, are we guaranteed not to pay UK taxes? Thanks ;-)

durham_lad

That is exactly the question I’d like to know the answer to as well

countrygirl33

I have been back in the UK for 7mths this year and 7 mths last year . I had a friend check on my home in US during those times . I'm thinking of renting my US home next year to see how that goes . I might decide to sell my US home in a couple of years . Anyone know how that will affect my tax situation and what might be the best move ? I'm wondering if might be better to keep on renting as the property values in California keep on rising .. Thanks

durham_lad

I think in this situation you will be subject to UK capital gains tax as this would not be your primary residence.

https://www.gov.uk/tax-sell-property...rseas-property

I don't know about US taxes but that may also be subject to cap gain taxes for the same reason.