mikelow

Can anyone tell me if I would have to pay capital gains tax in the US for a rental property I'm selling in the UK? I am in the US for around six months every year, but my main home is in the UK. I'm a non-resident in the UK.

I have tried to work through the US tax laws but they're very confusing.

lj2

It's relatively simple tax residency law - I would imagine any CPA or even somewhere like H&R block would be able to help you at very little cost? Any answer would need to be based on your specific number of days in each location and your contract so I wouldn't rely necessarily on any answer you get based on the limited info you have given.

I could answer the question the other way round (ie for the UK) and I'm an ACA with no tax experience.

Ray

You say you are non resident in the UK ..then where is you main residence

Jerseygirl

AFAIK you're a resident of the country your main residence is in. Therefore how can your main home be in the UK if you claim you are not a UK resident?

mikelow

What I mean by my home is, I still own the house I have lived in before I became non-resident.

For the last two years I have spent 6 mnths in the US, 3 in Spain & 3 in the UK

Ray

So which are you declaring your country of residence

mikelow

Well I wasn't going to declare any residense, as really I don't have a permanent residence. But if I had to I guess it would be Spain as I left the UK to avoid Taxation in the first place. I can't say US as my visa only allows 6 months as a non imigrant.

Jerseygirl

I was told that if you spend over 3 months of the year in the UK the Inland Revenue regard you as a resident of the UK. So add your dates up carefully.

Ray

I would guess its the UK ... unless you have permanent residence
in Spain...

Bob

IRS has different requirements on residence to immigration, so I'd not be so sure on that front...

im9907620

If you moved from the UK with that intent, you should have completed a P85 confirming your immediate future plans. If the HMRC are not satisfied that you have left permanently then you will still be considered as ordinarily resident and subject to UK tax, particularly if you have no permanent home in Spain or have applied for a residency permit. You would still be liable to any CGT liability on your property in the UK if you had officially 'escaped' (and not paid any) but returned within 5 full tax years. The Spanish CGT rate has reduced to almost that of the UK's so very little difference there, but you may be able to claim personal private residence and or letting relief in the UK which would reduce/minimise any UK CGT anyway.

meauxna

And the US has a similar way of calculating, but it's longer than 3 months.
Count the US days carefully too.

digbydog

Not sure you would want to claim Spain as your residence for avoiding taxes as Spain is a taxation nightmare (right up next to the USA!!). They have a worldwide taxation in place. Of course you could be like a lot of the British expats in Spain and not be on the radar but then you would not be registered as a resident.

It always amazes me that people do not realise just how tax friendly the UK really is compared to other countries.

Get yourself a decent accountant, pay a little tax and sleep well at night....