Capital Gains Tax on UK property?
#1
Capital Gains Tax on UK property?
We have a house in the UK that we have rented out since we've been in the States, 3 years. We currently rent here but are thinking about selling our UK house and buying out here now. In that event would we have to pay capital gains tax? If so, does anyone know what percentage and also does anyone know if I were to move back into the UK house for a few months leaving my OH here would that then negate the requirement to pay the Tax?
Were just sorting through our options at the moment.
Were just sorting through our options at the moment.
#2
Re: Capital Gains Tax on UK property?
Originally Posted by ladylisa
We have a house in the UK that we have rented out since we've been in the States, 3 years. We currently rent here but are thinking about selling our UK house and buying out here now. In that event would we have to pay capital gains tax? If so, does anyone know what percentage and also does anyone know if I were to move back into the UK house for a few months leaving my OH here would that then negate the requirement to pay the Tax?
Were just sorting through our options at the moment.
Were just sorting through our options at the moment.
#3
Re: Capital Gains Tax on UK property?
Originally Posted by ladylisa
We have a house in the UK that we have rented out since we've been in the States, 3 years. We currently rent here but are thinking about selling our UK house and buying out here now. In that event would we have to pay capital gains tax? If so, does anyone know what percentage and also does anyone know if I were to move back into the UK house for a few months leaving my OH here would that then negate the requirement to pay the Tax?
Were just sorting through our options at the moment.
Were just sorting through our options at the moment.
#4
Re: Capital Gains Tax on UK property?
Originally Posted by CarlM
It needs to be your primary residence for over 6 months of each year to be exempt. You will probably be liable for capital gains based on increase in the value over the 3 years youve been absent. Have you also been delaring the rent as income? They often tax the difference in the rent over mortgage payments.
What percentage is the capital gains tax, for some reason I'm thinking 5% but I dont know if I've made that up?
#5
Re: Capital Gains Tax on UK property?
Originally Posted by ladylisa
Thanks for that. Yes we fill out our inland revenue papers each year. As both years weve only made a profit of about £400 in total we havent paid any tax on it yet.
What percentage is the capital gains tax, for some reason I'm thinking 5% but I dont know if I've made that up?
What percentage is the capital gains tax, for some reason I'm thinking 5% but I dont know if I've made that up?
However if you did have substantial UK income the CGT could be payable at 40%.
I stand to be corrected on this as there seem to be a few financially clued up types on here but I come from a family of accountants so I'm pretty sure this is broadly speaking correct.
#6
BE Forum Addict
Joined: Oct 2004
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Re: Capital Gains Tax on UK property?
Originally Posted by ladylisa
Thanks for that. Yes we fill out our inland revenue papers each year. As both years weve only made a profit of about £400 in total we havent paid any tax on it yet.
What percentage is the capital gains tax, for some reason I'm thinking 5% but I dont know if I've made that up?
What percentage is the capital gains tax, for some reason I'm thinking 5% but I dont know if I've made that up?
Oh boy did you make it up!! It is treated as the top slice of your income and taxed at that rate per the income tax rates - though you should be able to offset your annual allowance. Also as mentioned if you cant claim as your main residence then you should only be hit for the increase since it stopped being your primary residence.
We were advised to be careful if we ever did this as the US tax your world wide income - although there are the reciprocal agreements in place i would be careful. It is probably worth taking some professional advice as the tax could be up to 40% depending on the amounts involved!
#7
Re: Capital Gains Tax on UK property?
Originally Posted by ladylisa
Thanks for that. Yes we fill out our inland revenue papers each year. As both years weve only made a profit of about £400 in total we havent paid any tax on it yet.
What percentage is the capital gains tax, for some reason I'm thinking 5% but I dont know if I've made that up?
What percentage is the capital gains tax, for some reason I'm thinking 5% but I dont know if I've made that up?
"You will normally have a chargeable gain if your property is worth more than you paid for it when you sell or dispose of it. However, the first £8,500 of your total taxable gains are tax free (tax year 2005-2006).
It’s worth bearing in mind that:
when working out the chargeable gain you can deduct some of the costs of buying, selling and improving the property
if you have made a loss on the property, you may be able to set that off against other chargeable gains you may have
if you are living together you can transfer property to your husband, wife or civil partner without having to pay CGT, but if you give it or sell it cheaply to your children or to others, you may be liable to pay CGT"
#8
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Re: Capital Gains Tax on UK property?
Originally Posted by BigDavyG
CGT is paid at whatever rate you pay your income tax, so as you have minimal UK income you'll be able to set some of your personal allowances against any gains, and this I think can apply to the allowances for the past 3 years (or however many years you are liable to CGT for as the house was no longer your primary residence).
However if you did have substantial UK income the CGT could be payable at 40%.
I stand to be corrected on this as there seem to be a few financially clued up types on here but I come from a family of accountants so I'm pretty sure this is broadly speaking correct.
However if you did have substantial UK income the CGT could be payable at 40%.
I stand to be corrected on this as there seem to be a few financially clued up types on here but I come from a family of accountants so I'm pretty sure this is broadly speaking correct.
Sorry to hear about your family of accountants
#9
Mr. Grumpy
Joined: Jun 2003
Location: Nashville, TN
Posts: 3,100
Re: Capital Gains Tax on UK property?
Excuse me if i'm talking out my ass - I believe most of the other posts have completely ignored the fact that you are probably a US taxpayer and therefore owe money to the IRS if you sell, NOT the inland revenue
READ THIS
http://www.irs.gov/taxtopics/tc409.html
http://www.irs.gov/publications/p523/index.html
You can also claim mortgage interest tax relief, council tax relief and also depreciation, as well as any maintenance cost etc
READ THIS
http://www.irs.gov/taxtopics/tc409.html
http://www.irs.gov/publications/p523/index.html
You can also claim mortgage interest tax relief, council tax relief and also depreciation, as well as any maintenance cost etc
Last edited by BritGuyTN; Jan 18th 2006 at 10:24 pm.
#10
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Re: Capital Gains Tax on UK property?
Originally Posted by BritGuyTN
Excuse me if i'm talking out my ass - I believe most of the other posts have completely ignored the fact that you are probably a US taxpayer and therefore owe money to the IRS if you sell, NOT the inland revenue
READ THIS
http://www.irs.gov/taxtopics/tc409.html
READ THIS
http://www.irs.gov/taxtopics/tc409.html
takes me back to my point that US tax worldwide income - however the UK will have an interest as the transaction is there. However there are ways round that through the reciprocal agreement - i think!
#11
Mr. Grumpy
Joined: Jun 2003
Location: Nashville, TN
Posts: 3,100
Re: Capital Gains Tax on UK property?
Originally Posted by Big D
takes me back to my point that US tax worldwide income - however the UK will have an interest as the transaction is there. However there are ways round that through the reciprocal agreement - i think!
I think ultimately the UK has nothing to do with it, as long as the Inland revenue have you down as non resident for tax
the only tax i think you have to pay in the UK is the VAT on management charges by an estate agent (if you use one that is)
#12
Re: Capital Gains Tax on UK property?
Originally Posted by BritGuyTN
Excuse me if i'm talking out my ass - I believe most of the other posts have completely ignored the fact that you are probably a US taxpayer and therefore owe money to the IRS if you sell, NOT the inland revenue
READ THIS
http://www.irs.gov/taxtopics/tc409.html
READ THIS
http://www.irs.gov/taxtopics/tc409.html
#13
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Re: Capital Gains Tax on UK property?
Originally Posted by BritGuyTN
I think ultimately the UK has nothing to do with it, as long as the Inland revenue have you down as non resident for tax
the only tax i think you have to pay in the UK is the VAT on management charges by an estate agent (if you use one that is)
the only tax i think you have to pay in the UK is the VAT on management charges by an estate agent (if you use one that is)
If that is the case why do i have to fill in 2 tax returns each year? IR (or whatever their fancy new name is) has me as non-resident but as i have income in both countries i do 2 returns. Not saying i pay tax in both mind you....
#14
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Re: Capital Gains Tax on UK property?
Originally Posted by ladylisa
True, we are US taxpayers. Go to the front of the class I always thought that if you sold in the UK and moved here with your house to set up immediately there would be no Capital Gains. However as we already live here would we now have to pay it if we sold our house?
the issue comes down to the tax breaks around your main residence - which your uk residence isnt as you are renting it out. you dont recognize a gain if you sell main residence - of course there are probably ways round this!
#15
Re: Capital Gains Tax on UK property?
Originally Posted by Big D
the issue comes down to the tax breaks around your main residence - which your uk residence isnt as you are renting it out. you dont recognize a gain if you sell main residence - of course there are probably ways round this!