Job and life in Boston questions :)
May 24th 2022, 1:03 pm
#181
BE Forum Addict
Joined: Jan 2016
Posts: 1,169
Re: Job and life in Boston questions :)
I wanted to add that in the US I've had 3x mortgages in total. Two had favorable rates, one did not. For the one that did not, I refinanced once rates came down. It took a few years of waiting, though.
May 24th 2022, 1:16 pm
#182
Furby
Joined: Apr 2016
Location: St. Louis, MO.
Posts: 874
Re: Job and life in Boston questions :)
You can deduct more expenses in the US than the UK and when you combine that with the depreciation that you are required to take, you may find that there is no profit to pay taxes on. That being a good thing, because the depreciation is just a book keeping expense. But, yes otherwise profit is taxed as ordinary income at your highest marginal rate, plus state taxes.
If you are subject to a large foreign currency gain based on the exchange rates from 9 years ago, I personally would sell before you get here, I don’t see the exchange rates recovering to those levels for a very long time. Plus, you typically need 20% deposit on a house to avoid what they call PMI, private mortgage insurance, which is compulsory if you have less than 20% equity. Typically that adds about 1% to the mortgage, more if you have not so good credit, and as a new arrival you will have no credit history which unfortunately is just as bad as bad credit.
House prices are insane right now, and there are signs they are starting to stall, so it may be a good idea to rent, with cash in hand, ready to move on a property if something comes up. There are way fewer properties for sale than normal times so the selection isn’t currently great, and in any case living in the area for 6 months to a year to determine where you want to live is probably a good idea overall, since areas just a few miles apart can be completely different. When I bought my first property over here, we negotiated a move in date that was 4 months after the purchase. It gave me time to get out my lease, and the owner more time to find somewhere else. Won’t work for everyone, but worked for both of us. Housing chains as we have in the UK don’t typically exist here, when an offer on a house a house is accepted it includes a date for the sale, and many owners either have to buy their new home before selling their existing one, scramble to find a new property very quickly if they sell before finding a new one, or move to rented accommodation. People in the latter two scenarios will normally be conducive to a sale date that is longer than the typical 4 weeks from offer to sale. Offers are also binding, you will lose any earnest funds paid when the offer is made if you withdraw.
If you are subject to a large foreign currency gain based on the exchange rates from 9 years ago, I personally would sell before you get here, I don’t see the exchange rates recovering to those levels for a very long time. Plus, you typically need 20% deposit on a house to avoid what they call PMI, private mortgage insurance, which is compulsory if you have less than 20% equity. Typically that adds about 1% to the mortgage, more if you have not so good credit, and as a new arrival you will have no credit history which unfortunately is just as bad as bad credit.
House prices are insane right now, and there are signs they are starting to stall, so it may be a good idea to rent, with cash in hand, ready to move on a property if something comes up. There are way fewer properties for sale than normal times so the selection isn’t currently great, and in any case living in the area for 6 months to a year to determine where you want to live is probably a good idea overall, since areas just a few miles apart can be completely different. When I bought my first property over here, we negotiated a move in date that was 4 months after the purchase. It gave me time to get out my lease, and the owner more time to find somewhere else. Won’t work for everyone, but worked for both of us. Housing chains as we have in the UK don’t typically exist here, when an offer on a house a house is accepted it includes a date for the sale, and many owners either have to buy their new home before selling their existing one, scramble to find a new property very quickly if they sell before finding a new one, or move to rented accommodation. People in the latter two scenarios will normally be conducive to a sale date that is longer than the typical 4 weeks from offer to sale. Offers are also binding, you will lose any earnest funds paid when the offer is made if you withdraw.
Last edited by Glasgow Girl; May 24th 2022 at 1:38 pm.
May 24th 2022, 1:47 pm
#183
BE Forum Addict
Joined: Jan 2016
Posts: 1,169
Re: Job and life in Boston questions :)
You can deduct more expenses in the US than the UK and when you combine that with the depreciation that you are required to take, you may find that there is no profit to pay taxes on. That being a good thing, because the depreciation is just a book keeping expense. But, yes otherwise profit is taxed as ordinary income at your highest marginal rate, plus state taxes.
If you are subject to a large foreign currency gain based on the exchange rates from 9 years ago, I personally would sell before you get here, I don’t see the exchange rates recovering to those levels for a very long time. Plus, you typically need 20% deposit on a house to avoid what they call PMI, private mortgage insurance, which is compulsory if you have less than 20% equity. Typically that adds about 1% to the mortgage, more if you have not so good credit, and as a new arrival you will have no credit history which unfortunately is just as bad as bad credit.
House prices are insane right now, and there are signs they are starting to stall, so it may be a good idea to rent, with cash in hand, ready to move on a property if something comes up. There are way fewer properties for sale than normal times so the selection isn’t currently great, and in any case living in the area for 6 months to a year to determine where you want to live is probably a good idea overall, since areas just a few miles apart can be completely different. When I bought my first property over here, we negotiated a move in date that was 4 months after the purchase. It gave me time to get out my lease, and the owner more time to find somewhere else. Won’t work for everyone, but worked for both of us. Housing chains as we have in the UK don’t typically exist here, when an offer on a house a house is accepted it includes a date for the sale, and many owners either have to buy their new home before selling their existing one, scramble to find a new property very quickly if they sell before finding a new one, or move to rented accommodation. People in the latter two scenarios will normally be conducive to a sale date that is longer than the typical 4 weeks from offer to sale. Offers are also binding, you will lose any earnest funds paid when the offer is made if you withdraw.
If you are subject to a large foreign currency gain based on the exchange rates from 9 years ago, I personally would sell before you get here, I don’t see the exchange rates recovering to those levels for a very long time. Plus, you typically need 20% deposit on a house to avoid what they call PMI, private mortgage insurance, which is compulsory if you have less than 20% equity. Typically that adds about 1% to the mortgage, more if you have not so good credit, and as a new arrival you will have no credit history which unfortunately is just as bad as bad credit.
House prices are insane right now, and there are signs they are starting to stall, so it may be a good idea to rent, with cash in hand, ready to move on a property if something comes up. There are way fewer properties for sale than normal times so the selection isn’t currently great, and in any case living in the area for 6 months to a year to determine where you want to live is probably a good idea overall, since areas just a few miles apart can be completely different. When I bought my first property over here, we negotiated a move in date that was 4 months after the purchase. It gave me time to get out my lease, and the owner more time to find somewhere else. Won’t work for everyone, but worked for both of us. Housing chains as we have in the UK don’t typically exist here, when an offer on a house a house is accepted it includes a date for the sale, and many owners either have to buy their new home before selling their existing one, scramble to find a new property very quickly if they sell before finding a new one, or move to rented accommodation. People in the latter two scenarios will normally be conducive to a sale date that is longer than the typical 4 weeks from offer to sale. Offers are also binding, you will lose any earnest funds paid when the offer is made if you withdraw.
May 25th 2022, 6:59 am
#184
Forum Regular
Thread Starter
Joined: Jan 2021
Posts: 65
Re: Job and life in Boston questions :)
Yes remortgaging will definitely be something I look into, as will renting first and finding out more about the places, what we like and don't like... we just don't want to move twice! (I think that's a fairly common feeling).
On the foreign current gain thing, does it matter how much of the mortgage is already paid off before moving to the USA, i.e. is the gain calculated from the date I become subject to US taxes until the date when the house is sold/gain realised? Or is it actually from the date when I bought the house? I ask because I'm in the fortunate situation that the mortgage is already completely paid off, which might mean there's no foreign currency gain risk.
Cheers
On the foreign current gain thing, does it matter how much of the mortgage is already paid off before moving to the USA, i.e. is the gain calculated from the date I become subject to US taxes until the date when the house is sold/gain realised? Or is it actually from the date when I bought the house? I ask because I'm in the fortunate situation that the mortgage is already completely paid off, which might mean there's no foreign currency gain risk.
Cheers
May 25th 2022, 12:25 pm
#185
Furby
Joined: Apr 2016
Location: St. Louis, MO.
Posts: 874
Re: Job and life in Boston questions :)
You are in good shape with the foreign currency gain. It is calculated on the amount of the mortgage that is paid off (or refinanced) while you are subject to US taxes. Since there is no mortgage, there is nothing to pay off and no foreign currency gain.
For others who may not be so lucky. Even the amount you pay each month if you have a repayment mortgage is subject to the gain. However there is an exception for each transaction with less than a $200 gain, therefore most people escape it on their monthly repayments unless they have a very large mortgage taken out when the exchange rates were much higher than current rates. Another strategy to reduce the tax is to make frequent lump sum payments where the foreign currency gain is less than $200 in each transaction to reduce the outstanding principal and lower the amount that will be subject to the gain when the mortgage is paid off.
For others who may not be so lucky. Even the amount you pay each month if you have a repayment mortgage is subject to the gain. However there is an exception for each transaction with less than a $200 gain, therefore most people escape it on their monthly repayments unless they have a very large mortgage taken out when the exchange rates were much higher than current rates. Another strategy to reduce the tax is to make frequent lump sum payments where the foreign currency gain is less than $200 in each transaction to reduce the outstanding principal and lower the amount that will be subject to the gain when the mortgage is paid off.
Last edited by Glasgow Girl; May 25th 2022 at 12:31 pm.
May 26th 2022, 10:41 am
#186
Forum Regular
Thread Starter
Joined: Jan 2021
Posts: 65
Re: Job and life in Boston questions :)
Good tips, thanks
