Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

Another UK property question!

Another UK property question!

Old Apr 28th 2020, 8:07 pm
  #1  
Forum Regular
Thread Starter
 
Joined: Mar 2019
Posts: 30
Els87 is an unknown quantity at this point
Default Another UK property question!

Hi all,

I know there are various threads on similar questions but I think everyones situation is slightly different, so here goes:

My Wife and I are currently living in the US on E2 visas having relocated in August 2019 with a short/medium term view of moving back to the UK again.

I own one property back in the UK which is rented out through a management agent with the mortgage allowing for Consent to Let. However, my fixed rate period is up in July 2020 after which it will go back to the lenders rate of circa 4%.

Firstly, I understand I will now have issues re-mortgaging (my LTV is around 70%) without a UK income unless I try to move it to a Buy to Let.

Secondly, what are my options with selling the UK property in the next few months and the CGT implication after certain periods?

If this sounds like a set of questions for an expert I'll start searching!
Els87 is offline  
Old May 1st 2020, 4:11 pm
  #2  
Lt Col (Retd)
 
Pulaski's Avatar
 
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 47,737
Pulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond repute
Default Re: Another UK property question!

I think these are all questions that have popped up fairly frequently here on BE.

Critically it depends how certain you are to return to the UK before you actually sell your home, and only you know that, but if you sell more than 36 months after you moved out, and while you are living in the US then you face a potential double whammy US CGT bill, on the gain since you bought your home (not since you became liable for US taxes), and there may be a tax on the notional gain on repaying your mortgage with devalued sterling, if GBP has fallen in value against USD since you first took out the mortgage, and that tax is automatic - not after 36 months, and can be a much larger tax bill than the tax on the gain on your home.

I believe that CGT in the UK will kick in 9 months after you move out, but IIUC, only on the time-apportioned gain after you moved out. E.g if you buy and live in your home for 9 years, move out and sell it 12 months later, i.e. 10 years after you bought it, you will pay CGT on 10% of the gain irrespective of how the price moved in the 12 months after you moved out. Personally, at that interest rate, I would let sleeping dogs lie, and not try to do any sort of refi or anything else that causes the lender to dig into your circumstances and finances, because so long as you continue to pay your mortgage every month it is unlikely anyone at the lender will ask any questions and legally there isn't much they could do either - keep paying and the lender will likely be happy enough.

So if you don't refi, the mortgage defaults to a mortgage at 4%? Where's the problem? That is, historically an extraordinarily low interest rate, probably not seen since the early 1960's, or earlier!

Last edited by Pulaski; May 1st 2020 at 4:46 pm.
Pulaski is offline  
Old May 1st 2020, 4:17 pm
  #3  
Forum Regular
Thread Starter
 
Joined: Mar 2019
Posts: 30
Els87 is an unknown quantity at this point
Default Re: Another UK property question!

I'd say with confidence we will be back in the UK before August 2022 (the 36 month limit). We could sell the home very shortly after moving back to the UK, say late 2021/early 2022 or sell it whilst being based in the US.

So what would be the best time to sell the property and from which location? Thanks for the help so far. Regarding the mortgage rate, its just me splitting hairs, it's still a very good rate
Els87 is offline  
Old May 1st 2020, 4:25 pm
  #4  
Lt Col (Retd)
 
Pulaski's Avatar
 
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 47,737
Pulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond repute
Default Re: Another UK property question!

Originally Posted by Els87 View Post
I'd say with confidence we will be back in the UK before August 2022 (the 36 month limit). We could sell the home very shortly after moving back to the UK, say late 2021/early 2022 or sell it whilst being based in the US.

So what would be the best time to sell the property and from which location? Thanks for the help so far. Regarding the mortgage rate, its just me splitting hairs, it's still a very good rate
[I added more to my post above.]

If you're going back for certain, I'd definitely wait until you return to the UK, because the US IRS tax on the FX "gain" on your mortgage, assuming you bought before the collapse of sterling in 2016, will be painful! And in fact (unless the HMR&C rule on CGT have changed), there is likely a very good reason to return to live in your home in the UK even very briefly, because the rules on periods when CGT is not charged, includes (and I think still does) "the last two years", but only if you're living in it at the time you sell, even if you hadn't been living in it for those two years. ..... But you need to check that with a tax accountant in the UK.
Pulaski is offline  
Old May 1st 2020, 4:37 pm
  #5  
Forum Regular
Thread Starter
 
Joined: Mar 2019
Posts: 30
Els87 is an unknown quantity at this point
Default Re: Another UK property question!

Makes sense so far! Thanks for the information.
Els87 is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.