DebraJulia

If you sold your house in the UK, which was your main residence, are you subject to USA Capital Gains Tax on the profit made?
Thanks.

vegas

My understanding is that for the US if you live in a house for at least 2 years you have $250k single or $500k joint on any capital gains you made on the house.

dbj1000

Again, as with all US tax questions, it is not so much a matter of where the house was, but rather whether or not you are a US resident alien for tax purposes.

Since we've already decided in another thread that you're resident for tax purposes, you are liable to the same rules as any other US tax payer regarding capital gains on sale of your primary residence.

As Vegas says, that means that if you lived in the house for more than 2 years you can exclude up to $500k (for married couples filing jointly, as I believe you will be) profit on the sale. Any profit above that level is liable for capital gains tax. If you lived in the house for less than 2 years, you cannot exclude any of the profit from the sale! We lived in our house for 2 years and 3 weeks before we sold it!!!

DebraJulia

2 years and 3 weeks, wow u just about made it then! lol Got another question for you .... installment sale? Any ideas? Thanks! Here let me buy you a drink for my gratitude

dbj1000

I'll settle for some Karma

Sorry, I know nothing about installment sales. But then again, if I answer all your tax questions I'll have to charge you a CPA fee

DebraJulia

Now, now, doesn't anybody do anything for free nowadays? Just look at it this way, you will be rewarded in heaven! lol

Something I really don't like though, having to give details of my bank account in the UK, kinda feels like an invasion of privacy. What makes me laugh though is, you can't bring over your credit record, its not recognised here, same with car insurance, the no claims bonus etc, so the premiums are through the roof and getting a decent mortgage rate without a credit history is a joke. But when it suits they'll take into reflection activities in your UK bank account.

strim

Real Estate is treated differently to other Capital Gains and under the UK/US Tax treaty the tax is due in the country where the property is located.

e.g. if you are a US resident owning real property in the UK, you would be taxable in the UK on any gains from the property.


Also with the 2 year rule they have in the US, my understanding is that if you sell prior to the 2 years you are still eligible for a proportion of the allowance. e.g. if you sell after 1 year you can get 50% of the allowance.

dbj1000

Interesting! I didn't know any of that.

You don't happen to have a link to any IRS documents with details, do you? I'm keen to arm myself with as much info as possible before I go into battle with my CPA

strim

Take a look at this link. (P10 taxation of gains - article 13)

www.inlandrevenue.gov.uk/bulletins/tbse6.pdf

The US site doesn't have much detail on specific treaties.

I'll check out if I still have the details about living somewhere less than 2 years and post it if I can find it.
Good Luck!