Buying UK property for investment
#1
Forum Regular
Thread Starter
Joined: Dec 2011
Location: San Francisco
Posts: 41
Buying UK property for investment
GC holder, about to become a US Citizen within the next year I suspect.
A suggestion was made to me to look into buying UK property as an investment.
Disregarding issues with UK property valuations, and forex fluctuations, I'm thinking that this type of investment is a really painful idea due to the capital gains tax that will be eventually due? (Did several searches for this topic on the forum).
I'm not sure it would pursue rental income, just capital appreciation, so the only painful event would be the final sale.
Thanks for any advice.
A.
A suggestion was made to me to look into buying UK property as an investment.
Disregarding issues with UK property valuations, and forex fluctuations, I'm thinking that this type of investment is a really painful idea due to the capital gains tax that will be eventually due? (Did several searches for this topic on the forum).
I'm not sure it would pursue rental income, just capital appreciation, so the only painful event would be the final sale.
Thanks for any advice.
A.
#2
Re: Buying UK property for investment
You depreciate over 40 years instead of 27.5, you are subject to FOREX with regards to CGT and income, could be good or bad. Extra FBAR filings and tax forms to fill. You only pay CGT when you sell it. If you want to sell and buy another overseas property, no CGT is payable if you use 1031 exchange. You cannot sell it and buy US property or sell to family without paying CGT.
Taxes are a little more work.
If the numbers work income wise, it's worth doing, don't do it for capital appreciation because you may suffer.
Taxes are a little more work.
If the numbers work income wise, it's worth doing, don't do it for capital appreciation because you may suffer.
#3
BE Enthusiast
Joined: Nov 2012
Posts: 902
Re: Buying UK property for investment
As with any business, run some forecasts including the costs of both US and UK accountants annually and US and UK tax annually and on sale.
Build in possible exchange movements into your projections as well; plus the cost of UK IHT on your death (if you care).
Build in possible exchange movements into your projections as well; plus the cost of UK IHT on your death (if you care).
#4
Forum Regular
Joined: Apr 2016
Location: California
Posts: 233
Re: Buying UK property for investment
Take into account the State you would be resident in when you come to sell the property, as this can make quite a big difference. In California, you'd have to pay State tax (which can be quite high, up to 13%) in addition to Federal tax, on your gain, whereas in some States you wouldn't have to pay any State tax.
#5
Re: Buying UK property for investment
Also are you aware the cost basis for CGT will fall every year.this is just on the building value, not the land value. I'm assuming this is not farm land.
#6
Forum Regular
Joined: Apr 2016
Location: California
Posts: 233
Re: Buying UK property for investment
Can you explain this? Money that you spend on improving the property is added to your cost basis for CGT. Is this something else?
#7
Re: Buying UK property for investment
You will depreciate the cost basis for the building by 1/40th every year. This you can claim against your taxes. So after 40 years the cost basis is just the land value. Every improvement you do will also depreciate over 40 years.
#8
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Joined: Apr 2016
Location: California
Posts: 233
Re: Buying UK property for investment