Glasgow Girl

No tax on exchanging currency so long as you are not trading foreign currency to make a profit.

Bob

We do. It goes to your town as a annual excise tax. This includes if you lease a car, not just own it.

bostonwilly

Okay, so house tax sounds a bit like tax foncier in France (owner pays, and tenant pays in directly via rent) and not like council tax in the UK (occupant pays).

I looked up MA motor vehicle excise tax, sounds a bit like UK road tax.

I don't want to lease a car, feels pretty risky when I could effectively be shown the door with no notice and have to leave the USA within 2 weeks if I don't find alternative employment. Mortgage I can cope with as I could rent the house out. I'm not sure what happens if I have to leave the country with several months left to go on a tenancy agreement though, presumably I'd be liable to pay the full contract's worth of rent or negotiate with the landlord.

I spoke to a US-based mortgage broker on Friday who deals with foreigners buying in the USA. Sounds like I'll have to pay 1-2% more interest just due to lack of US credit history, even though my UK credit history is excellent. He also said that utilities also cost more because of having no credit history and that very few insurers will provide car insurance to people with no US credit history! Crikey.

Cheers

Glasgow Girl

As an expat expect to be looking at about $2,000 a year for first couple of years of car insurance for a standard family car, then it goes down quickly but will always be more than what you are used to in the UK. Geico is excellent for expat car insurance, you should have no trouble getting insurance with them. I would buy a car if you are concerned about leasing. CarMax will buy your car on the spot, at surprisingly decent rates so that would be an option if you had to leave in a hurry. If you rent a house and had to break the lease, the landlord is legally required to re-rent the house as soon as reasonably possible and you are only on the hook for the lease until then. In your circumstances, given that the landlord would have a hard time collecting the outstanding rent they would almost certainly negotiate an early lease termination fee, or you could try and negotiate that up front, 2 months rent would be reasonable and typical.

bostonwilly

Thanks for the info Glasgow Girl.
Cheers

Bob

Regarding the car. You have registration tax which is more like the road tax, a annual inspection, like the MOT, sales tax even on second hand, and then the annual excise property tax.

The lease, depends on your lease agreement. Usually, you would be responsible to pay the rent until a new tenant is found, and you would pay for any expenses to look for a new tenant. Realtor typically charges x1-3 months rent in finders fee, this is often dumped on the new tenant but you could be asked to pay this to make it more attractive to get a new tenant etc.

Insuring a car is easy, they don't care about your lack of US credit or driving history, they just charge you more, and it's expensive to insure a car in MA. Utilities, you won't pay a higher rate, but you most likely will be asked to put down a deposit that's refundable after the first 12 months, this ranges from $50-600 usually. Depending on how old your place is, size, type of heat/cooling source etc, you can be paying anything from $50-500 a month for electric, and again for heat in the winter. If you find a rental you're interested in, you can call the utility company and give them the address and ask what the last 12 month and average monthly spend was for the previous tenant, which will give you a indication of cost, but won't tell you how hot they had the place in winter, or how cool they had it in winter etc.

bostonwilly

Thanks for the explanation and tips. Lots to bear in mind!
Cheers

PetrifiedExPat

Ball park excise tax for us... ~70,000 USD car incurred ~1500 USD tax for year 1. The tax will reduce quickly for us after that.

tht

similar in CT based on some % of book value… so drops off after year 1 and then a little a year. For leased cars the owner payers and then you get an invoice for it months later from them…

Bob

In MA, you pay it directly. It's a slightly different formula to the one used if you own it, but it's a similar sum you end up paying.

bostonwilly

Thanks all for the car tax info, all stuff I need to add to the budget.

I was thinking again about selling our UK house and realised that this foreign currency gain tax is pretty weird. The exchange rate now is terrible, so it's actually a bad time (if one has the choice) to transfer loads of pounds to dollars anyway. If there's then foreign currency gain tax on top of that, if we sell the house whilst resident in the USA, then that's a double whammy! Where if we could wait until the exchange rate recovers (gamble) and then sell the house and transfer the money then we'd get a better rate and pay less foreign currency gain tax. If we sell the house now whilst resident in the UK, then invest it somewhere short term and wait for a better exchange rate before we transfer it, then we'll pay foreign currency gain on the growth in pounds/dollar value since the house sale. Have I understood that right?

Cheers

postbox134

You could leave the money in cash in £ once you sell now, and transfer at a later date. Remember trying to time the market is a fool's errand ususal.
Whatever you invest it in again in the UK should be something that is treated well by the IRS, individual stocks perhaps. Stocks and shares ISAs come to mind as somewhere you do not want to have your money in when subject to IRS tax rules...

Glasgow Girl

No. You only pay taxes on a foreign currency gain if you sell the property while subject to IRS taxes. Therefore, so long as you are not a US citizen, and not a permanent resident, when you sell you will escape the foreign currency tax and US capital gains. You can invest the proceeds however you lIke, and exchanging them to USD whether you do that while in the UK or US will not incur any taxes, unless you were trading currency with the objective of making a profit. Exchanging funds for personal use or reasons would not be subject to foreign currency tax.

I agree that the exchange rate is pretty bad right now so I would not exchange more than you need at these exchange rates. However as you stated waiting for a better rate is a gamble. Lots of people have lost out significantly waiting for a better exchange rate. It’s a judgement call for sure, but I think the rate is bit of an anomaly right now.

PetrifiedExPat

I have dealt significantly with JPY and GBP exchanges in recent years. I did not try and time the JPY, sums to large and threat of loss too great, I just took on the chin whatever desk rate was that day. GBP (under 50,000) I would wait and see, but no more than a week or two. In the end now I think, why bother? It is what it is on the day..

bostonwilly

Yes, it's a fools errand, a gamble... we need to decide what we want to do with the house regardless of the US exchange rate. UK rental income will no doubt be taxed at the marginal rate in the US I presume, and if we're going to buy a house then we need a deposit, but interest rates are high at the moment (the best I've been quoted is 5.5% but that's not actually a pre-approval) whilst renting we'll not really have the freedom to make changes to the house we're in... argh, so many variables!

Thanks for all the advice, much appreciated.
Cheers