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Green Card Holder Buy to Let Mortgage in the UK

Green Card Holder Buy to Let Mortgage in the UK

Old Feb 1st 2015, 3:41 pm
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Default Green Card Holder Buy to Let Mortgage in the UK

Hi,
I am a UK citizen, my spouse is from the US.I have applied for a CR1 visa and the application is still at NVC.

I have a property in the UK which is rented out. I understand I will have to declare this income both for the UK and in the US which is fine.

My question is.

After I receive my green card and start living in the USA, If I decide I want to remortgage the property in the future will I still be able to get a buy to let mortgage for my property in the UK from UK mortgage providers?

or

Would it be wiser to get the property remortgaged now before I leave for the US?

Also do you know what implications that may have on me as far as fatca is concerned.

As it stands I have no loan on the property and I also have less than $10000 in my accounts so I do not have to fill in a FBAR.

My thoughts behind this is to free up some money from the property which will also help me write of the interest against profit thus reducing my tax bill.
I also understand that they are thinking of scrapping the tax threshold in 2015 for non residents.

Regards,
Natters
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Old Feb 1st 2015, 4:06 pm
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Default Re: Green Card Holder Buy to Let Mortgage in the UK

Originally Posted by Natters108 View Post
Hi,
I am a UK citizen, my spouse is from the US.I have applied for a CR1 visa and the application is still at NVC.

I have a property in the UK which is rented out. I understand I will have to declare this income both for the UK and in the US which is fine.

My question is.

After I receive my green card and start living in the USA, If I decide I want to remortgage the property in the future will I still be able to get a buy to let mortgage for my property in the UK from UK mortgage providers?
That will be much harder once you are no longer a U.K. resident. Not necessarily impossible, but more difficult.



My thoughts behind this is to free up some money from the property which will also help me write of the interest against profit thus reducing my tax bill.
Pay a dollar in interest to save maybe 35 cents in taxes? Not a good financial strategy, usually.

I also understand that they are thinking of scrapping the tax threshold in 2015 for non residents.
They are, but as far as I understand that's deferred to 2017. In any case, that wouldn't really affect you since any tax you pay to the U.K. would likely offset against your U.S. tax.

What's much more important is that if you sell the property after becoming a U.S. tax resident, you will have to pay capital gains on the entire gain. Unless you have lived in it for 2 years out of the last 5, even then there may be some tax to pay.

Of course, you should compare this to the U.K. capital gain you would pay either if you sell the property before becoming U.S. resident, or afterwards. Take into account that non-residents must be outside the U.K. for 5 years to escape the capital gains tax net and they are going to tax appreciation from April 2015 regardless.

One further issue to consider. If you keep the property in the U.K. it will always be subject to U.K. Inheritance Tax, even if you lose your domicile in the United Kingdom.

Have you considered selling the property?
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Old Feb 1st 2015, 4:13 pm
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Default Re: Green Card Holder Buy to Let Mortgage in the UK

Originally Posted by JAJ View Post
That will be much harder once you are no longer a U.K. resident. Not necessarily impossible, but more difficult.





Pay a dollar in interest to save maybe 35 cents in taxes? Not a good financial strategy, usually.




They are, but as far as I understand that's deferred to 2017. In any case, that wouldn't really affect you since any tax you pay to the U.K. would likely offset against your U.S. tax.

What's much more important is that if you sell the property after becoming a U.S. tax resident, you will have to pay capital gains on the entire gain. Unless you have lived in it for 2 years out of the last 5, even then there may be some tax to pay.

Of course, you should compare this to the U.K. capital gain you would pay either if you sell the property before becoming U.S. resident, or afterwards. Take into account that non-residents must be outside the U.K. for 5 years to escape the capital gains tax net and they are going to tax appreciation from April 2015 regardless.

One further issue to consider. If you keep the property in the U.K. it will always be subject to U.K. Inheritance Tax, even if you lose your domicile in the United Kingdom.

Have you considered selling the property?
I plan on investing the money on a property in USA which I will rent out, so this should more than pay the interest.


I don't want to sell the property as we are planning to return to the UK in the future.

Last edited by Natters108; Feb 1st 2015 at 4:15 pm.
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Old Feb 1st 2015, 4:50 pm
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Default Re: Green Card Holder Buy to Let Mortgage in the UK

Pick the mortgage company wisely. There have been some similar threads in the past and from memory very few banks like to do buy to let mortgages for US tax residents. I want to say Halifax but use the search function.
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Old Feb 1st 2015, 5:12 pm
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Default Re: Green Card Holder Buy to Let Mortgage in the UK

Originally Posted by Natters108 View Post
I plan on investing the money on a property in USA which I will rent out, so this should more than pay the interest.


I don't want to sell the property as we are planning to return to the UK in the future.
So you go from having one paid-for property (in the U.K.) to having two properties, one paid for (in the U.S.) and one mortgaged (in the U.K.)

Why would you want to do that? And even if you did, why not get the loan on the U.S. property?

Also, since you say you plan to return to the U.K. later, you need to think ahead about your green card. You'll continue to be liable to file U.S. taxes as a resident unless and until you formally abandon your green card, and depending on how long you hold the green card, the expatriation tax provisions may apply. Or is your intention to become a U.S. citizen first?
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Old Feb 1st 2015, 5:31 pm
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Default Re: Green Card Holder Buy to Let Mortgage in the UK

We remortgaged 2 years ago for our UK property that we let out and we got a really good rate from Halifax. Our fixed rate is up this year and we plan on selling the house.
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Old Feb 2nd 2015, 10:19 pm
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Default Re: Green Card Holder Buy to Let Mortgage in the UK

Don't forget that a future repayment of a Sterling mortgage may trigger a taxable foreign currency gain in the US, which could result in a substantial tax bill...
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Old Feb 2nd 2015, 11:33 pm
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Default Re: Green Card Holder Buy to Let Mortgage in the UK

Originally Posted by SarahG View Post
We remortgaged 2 years ago for our UK property that we let out and we got a really good rate from Halifax. Our fixed rate is up this year and we plan on selling the house.
According to this Halifax and a number of other major lenders have exited the expat mortgage market:

BBC News - UK expats 'struggling to buy a home'
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Old Feb 3rd 2015, 6:45 am
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Default Re: Green Card Holder Buy to Let Mortgage in the UK

Originally Posted by Cook_County View Post
Don't forget that a future repayment of a Sterling mortgage may trigger a taxable foreign currency gain in the US, which could result in a substantial tax bill...
I'm unclear what this means. It will be a buy to let interest only mortgage. Regardless of having a remortgage wouldn't my selling the property trigger a taxable foreign currency gain?
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