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

Capital Gains Tax on UK property?

Capital Gains Tax on UK property?

Old Jan 18th 2006, 7:17 pm
  #1  
BE Forum Addict
Thread Starter
 
ladylisa's Avatar
 
Joined: Feb 2004
Location: Mid West >> UK
Posts: 1,239
ladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond repute
Default 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.
ladylisa is offline  
Old Jan 18th 2006, 7:28 pm
  #2  
Not here much
 
neil's Avatar
 
Joined: Jan 2005
Location: Highland Park, NJ
Posts: 2,452
neil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond reputeneil has a reputation beyond repute
Default 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.
There's some sort of requirement about having to have lived there for 2 out of the last 5 years, so if you've been here for 3 years then chances are by the time you sell it you will have to pay capital gains. Apparently from what I've heard if you don't meet that requirement you only pay on the gain from the end of the 3 years that you were not there so it probably wouldn't be much. I'm in a similar situation in that my place sold just after the 3 years were up - I need to look more into the tax implications for that this year so if you find anything more out then let me know and I'll do the same for you.
neil is offline  
Old Jan 18th 2006, 7:28 pm
  #3  
strangely floppy..
 
CarlM's Avatar
 
Joined: Mar 2005
Location: Ohio - originally London
Posts: 1,719
CarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond repute
Default 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.
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.
CarlM is offline  
Old Jan 18th 2006, 7:34 pm
  #4  
BE Forum Addict
Thread Starter
 
ladylisa's Avatar
 
Joined: Feb 2004
Location: Mid West >> UK
Posts: 1,239
ladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond repute
Default 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.
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?
ladylisa is offline  
Old Jan 18th 2006, 7:39 pm
  #5  
Thinking about it
 
BigDavyG's Avatar
 
Joined: Oct 2005
Location: Mid-West
Posts: 9,435
BigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond repute
Default 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?
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.
BigDavyG is offline  
Old Jan 18th 2006, 7:43 pm
  #6  
BE Forum Addict
 
Joined: Oct 2004
Location: The Big Apple
Posts: 1,834
Big D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond repute
Default 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?

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!
Big D is offline  
Old Jan 18th 2006, 7:43 pm
  #7  
strangely floppy..
 
CarlM's Avatar
 
Joined: Mar 2005
Location: Ohio - originally London
Posts: 1,719
CarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond reputeCarlM has a reputation beyond repute
Default 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?
A quick Google search bought this 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"
CarlM is offline  
Old Jan 18th 2006, 7:44 pm
  #8  
BE Forum Addict
 
Joined: Oct 2004
Location: The Big Apple
Posts: 1,834
Big D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond repute
Default 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.
Indeed - but i thought they had stopped or limited the ability to carry over? Probably wrong on that one though.

Sorry to hear about your family of accountants
Big D is offline  
Old Jan 18th 2006, 10:21 pm
  #9  
Mr. Grumpy
 
Joined: Jun 2003
Location: Nashville, TN
Posts: 3,100
BritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond repute
Default 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

Last edited by BritGuyTN; Jan 18th 2006 at 10:24 pm.
BritGuyTN is offline  
Old Jan 18th 2006, 10:23 pm
  #10  
BE Forum Addict
 
Joined: Oct 2004
Location: The Big Apple
Posts: 1,834
Big D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond repute
Default 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

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!
Big D is offline  
Old Jan 18th 2006, 10:26 pm
  #11  
Mr. Grumpy
 
Joined: Jun 2003
Location: Nashville, TN
Posts: 3,100
BritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond reputeBritGuyTN has a reputation beyond repute
Default 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)
BritGuyTN is offline  
Old Jan 18th 2006, 10:26 pm
  #12  
BE Forum Addict
Thread Starter
 
ladylisa's Avatar
 
Joined: Feb 2004
Location: Mid West >> UK
Posts: 1,239
ladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond reputeladylisa has a reputation beyond repute
Default 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
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?
ladylisa is offline  
Old Jan 18th 2006, 10:28 pm
  #13  
BE Forum Addict
 
Joined: Oct 2004
Location: The Big Apple
Posts: 1,834
Big D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond repute
Default 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)

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....
Big D is offline  
Old Jan 18th 2006, 10:31 pm
  #14  
BE Forum Addict
 
Joined: Oct 2004
Location: The Big Apple
Posts: 1,834
Big D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond reputeBig D has a reputation beyond repute
Default 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!
Big D is offline  
Old Jan 18th 2006, 10:38 pm
  #15  
Thinking about it
 
BigDavyG's Avatar
 
Joined: Oct 2005
Location: Mid-West
Posts: 9,435
BigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond reputeBigDavyG has a reputation beyond repute
Default 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!
As I undeerstood it though everyone is allowed one main residence and they can chose that to be whichever house they want if they have a portfolio - its just that they can't change the election as a way of avoiding tax. In this case the property was bought as a main residence and has not been superceeded by any other UK property as a main residence so it may still be exempt. My only doubt arises because of the OP's non-resident status.
BigDavyG is offline  

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.