Tominamerica

Hi Team,

There doesn't seem to be a facility to search past threads which is unusual. I am sure this question will have been asked previously, but I am hoping someone will be able to shed some light for me.

I work for a British firm in our Boston office and am looking to buy a condo. I don't own a property in the UK, this would be my first and only. I currently have my taxes filed by Delloite, and so all the stress of paying tax in both countries is taken off my hands. My question is around selling the condo several years down the line, and the tax implications of doing so. Let's imagine in 7 years I sell the place and make a few $ as the cost has gone up. Am I looking at capital gains tax in both countries? What are the pitfalls? Has anyone had a similar experience? I appreciate that there is a tax treaty between the two countries which should help.

Any advice is appreciated.

Cook_County

Tom - as you use Deloitte India as your accountant, they should help you.


If they don't or won't, you can complain to your employer who is the one who is paying them. Under current law you might get a tax deduction for mortgage interest and real estate taxes. If you are equalised, your employer would get the tax saving. If you meet the ownership & use tests, under current law you'd qualify for the $250,000 exclusion.

Pulaski

If you live and work in the US you shouldn't be paying UK taxes anyway.

If you are living in the US and either single, or married filing separately, then you would pay by CGT in the US on gains over $250,000, or twice that if you're married filing jointly. If you return to live the UK before you sell the house then there would likely be a separate CGT computation in the UK, though the UK rules are more generous to gains on your home, unless you own it for 18 months or more after you move out.

Rete

There most certainly is a search engine on BE. It is on the bar at the top of each page. There is a click down menu there as well for a more advance search. Have you checked out the wiki for information?

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nun

Your capital gains tax on the sale of the condo will depend on your residency status and how you've been using the place for the last few years....ie as a permanent home of a rental.

Also why are you paying UK tax if you are living and working in the US? Is this payroll taxes under the US/UK SS agreement or is it tax on UK source income and investments?

Tarkak9

I think the rule of thumb is, "last 2 of the previous 5 years" the property has to be the primary residence inorder to qualify for such capital gains exemption (cost basis based, anyway) otherwise you could be subject to short or long term cap gains; (which then people explore 1031 exchange, but I don't think a property abroad qualifies in the first place).

Deducting interest and prop tax is an itemized deduction so such benefit would also depend on if claiming a standard deduction or not, and which path gives most deduction for your situation.

If you sell, double check whether any transfer and/or sales tax is applicable for your area .... also double check whether or not any state or fed withholdings is applicable, too, since one is intending to move to the UK .... sorta goes hand-in-hand why they ask for a forwarding address.

Tominamerica

Thanks team, useful responses. Some potential follow up questions from that, but for now it is a good start for me! Appreciated.