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Living in the UK as a Non-Resident

Living in the UK as a Non-Resident

Old Jun 16th 2023, 6:03 am
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Default Living in the UK as a Non-Resident

A few background details to begin with. I married an American citizen in 2004 and have been a permanent resident of the USA since 2005. I have retained my British citizenship. My mother turned 90 this year and we have decided to spend more time in the UK each year to be with her as she grows increasingly frail. My wife and I have both recently taken early retirement and anticipate staying three to four months in the summer and a month to six weeks in the winter. At this time we do not intend to settle permanently in the UK.

We are looking to buy a flat/apartment which will be our only home in the UK. It won't be used for rental income. (I am aware of the stamp duty rules for non-residents.) We would use the flat as a base from which to take my mother on short holidays, days out, doctors appointments, shopping trips etc.

The housing-related questions I've thought of so far are as follows:

Is a property used for less than six months of the year considered by UK authorities as a permanent address? Can a non-resident even be considered to have a permanent address?

How easy is it to obtain house and contents insurance and are there any recommended companies that deal with non-residents and expats?

Same with car insurance. Are there any recommended companies which would insure a car owned by a non-resident which will be garaged for most of the year? Actually, it will be an MOT and tax exempt classic car. (A long story.)

Thanks in advance for any replies, advice and suggestions.
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Old Jun 16th 2023, 6:50 am
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Default Re: Living in the UK as a Non-Resident

Unless the rules have changed (AFAIK they haven't), if as a British citizen, you have a home "available" anywhere in the UK then you are resident at the time you enter the UK irrespective of whether you visit the home, are even within 500 miles of it, never mind spend a single night there.

If tax is a significant concern for you then a meeting/ conversation with a Chartered Accountant, to discuss the tax implications of your plans, is probably worth the investment of time and money.
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Old Jun 16th 2023, 7:01 am
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Default Re: Living in the UK as a Non-Resident

Originally Posted by OldEastEnder
A few background details to begin with. I married an American citizen in 2004 and have been a permanent resident of the USA since 2005. I have retained my British citizenship. My mother turned 90 this year and we have decided to spend more time in the UK each year to be with her as she grows increasingly frail. My wife and I have both recently taken early retirement and anticipate staying three to four months in the summer and a month to six weeks in the winter. At this time we do not intend to settle permanently in the UK.

We are looking to buy a flat/apartment which will be our only home in the UK. It won't be used for rental income. (I am aware of the stamp duty rules for non-residents.) We would use the flat as a base from which to take my mother on short holidays, days out, doctors appointments, shopping trips etc.

The housing-related questions I've thought of so far are as follows:

Is a property used for less than six months of the year considered by UK authorities as a permanent address? Can a non-resident even be considered to have a permanent address?

How easy is it to obtain house and contents insurance and are there any recommended companies that deal with non-residents and expats?

Same with car insurance. Are there any recommended companies which would insure a car owned by a non-resident which will be garaged for most of the year? Actually, it will be an MOT and tax exempt classic car. (A long story.)

Thanks in advance for any replies, advice and suggestions.
If you plan to spend significant time away from the US as a PR you may want to consider becoming a USC…

If your wife is only a USC she may get questions about spending significant time in the UK.

In terms of tax and residency it’s not an either/or you have to look at each countries own rules independently, your pattern could trigger tax residence in the UK, having a home shortens the time significantly where this is triggered..

https://www.gov.uk/government/public...-test-srt-rdr3

I spent 2-3 years commuting to the UK from my home in the US and this was also subject to UK tax, this may not be a big deal if your not working and don’t remit a lot of money to the UK. Note that while there is a DTA that covers UK and Federal tax you don’t get that credit at the State or City level. I would do some research and planning before you do this.


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Old Jun 16th 2023, 7:19 am
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Default Re: Living in the UK as a Non-Resident

I would be concerned that you both might become resident for the purposes of UK income tax & CGT, resulting in UK tax on worldwide income & gains. You are probably still UK domiciled for UK IHT; your wife is not.

Separately, notwithstanding tax residence or your wife's immigration status, it appears unlikely either of you would have access to most NHS care, so you would both wish to ensure you have adequate health insurance.
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Old Jun 16th 2023, 7:28 am
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Default Re: Living in the UK as a Non-Resident

At some time your wife may get asked questions at the border as to her extended presence in the UK i.e 'living' there while under visitor status.

Your wife would not be eligible for NHS treatment so she would need medical insurance. Indeed, your own situation (you require to be a non resident) may make you ineligible too.
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Old Jun 16th 2023, 10:06 am
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Default Re: Living in the UK as a Non-Resident

Well, that was an education. I've never seen such a set of byzantine rules (thanks tht) like the SRT. I had assumed that if I spent fewer than 182 days in the UK (with one tie) I would be a non-resident for tax purposes and my wife would be able to visit for up to 6 months as a "Standard Visitor". I was already aware of NHS ineligibility.

The best-laid plans of mice and men.....as the saying goes.
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Old Jun 16th 2023, 10:23 am
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Default Re: Living in the UK as a Non-Resident

Originally Posted by OldEastEnder
Well, that was an education. I've never seen such a set of byzantine rules (thanks tht) like the SRT. I had assumed that if I spent fewer than 182 days in the UK (with one tie) I would be a non-resident for tax purposes and my wife would be able to visit for up to 6 months as a "Standard Visitor". I was already aware of NHS ineligibility.

The best-laid plans of mice and men.....as the saying goes.
they made new rules a while back … you had people under the old rules who would fly in on a Monday and leave on a Friday after work and because the day of entry and exit did not count that only 3 days a week which his only 156 days a year even before holidays… meanwhile their wives lived full time in the UK and their children went to school etc…
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Old Jun 22nd 2023, 5:32 am
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Default Re: Living in the UK as a Non-Resident

Originally Posted by OldEastEnder
A few background details to begin with. I married an American citizen in 2004 and have been a permanent resident of the USA since 2005. I have retained my British citizenship. My mother turned 90 this year and we have decided to spend more time in the UK each year to be with her as she grows increasingly frail. My wife and I have both recently taken early retirement and anticipate staying three to four months in the summer and a month to six weeks in the winter. At this time we do not intend to settle permanently in the UK.

We are looking to buy a flat/apartment which will be our only home in the UK. It won't be used for rental income. (I am aware of the stamp duty rules for non-residents.) We would use the flat as a base from which to take my mother on short holidays, days out, doctors appointments, shopping trips etc.

The housing-related questions I've thought of so far are as follows:

Is a property used for less than six months of the year considered by UK authorities as a permanent address? Can a non-resident even be considered to have a permanent address?

How easy is it to obtain house and contents insurance and are there any recommended companies that deal with non-residents and expats?

Same with car insurance. Are there any recommended companies which would insure a car owned by a non-resident which will be garaged for most of the year? Actually, it will be an MOT and tax exempt classic car. (A long story.)
...
Nice plan; my mum declined rapidly from age 90 and I wish now I'd spent more time visiting her. I did fly back about 3-4 times a year to visit, but I was just in the process of thinking through longer-term rentals and/or a possible local purchase when she passed away. I'm still toying with the idea of going over there for extended periods now I'm retired and have a bunch of grand-nephews and nieces - I'd like to participate more in their lives as they grow up.

On a practical matter, my mum needed a wheelchair and that basically required a decent sized car (or at least a car with a decent sized 'boot'), so using a 'classic' car may or may not be practical. You'll also need a car that is relatively easy to get in / out of (if she has mobility issues). Some of my rental cars were wholly inappropriate for this purpose. We were able to get a 'blue badge' that could be used in any car, so both my brother and I could take her out and about and take advantage of disabled parking.

Originally Posted by Pulaski
Unless the rules have changed (AFAIK they haven't), if as a British citizen, you have a home "available" anywhere in the UK then you are resident at the time you enter the UK irrespective of whether you visit the home, are even within 500 miles of it, never mind spend a single night there.

....
Does 'available' include a rental or an owned house? I was thinking I might just get a long-term furnished rental, but also toyed with the idea of giving or investing some money with one of my relatives so they could buy a bigger house and then provide me with a comfortable room when I visit. Owning a property that will be empty much of the year just isn't something I like the idea of.

Originally Posted by tht
If you plan to spend significant time away from the US as a PR you may want to consider becoming a USC…

If your wife is only a USC she may get questions about spending significant time in the UK.

In terms of tax and residency it’s not an either/or you have to look at each countries own rules independently, your pattern could trigger tax residence in the UK, having a home shortens the time significantly where this is triggered..

https://www.gov.uk/government/public...-test-srt-rdr3

I spent 2-3 years commuting to the UK from my home in the US and this was also subject to UK tax, this may not be a big deal if your not working and don’t remit a lot of money to the UK. Note that while there is a DTA that covers UK and Federal tax you don’t get that credit at the State or City level. I would do some research and planning before you do this.
Thanks for the SRT link! Yikes, that is a convoluted process!

Other than the state/local tax issues in the US, from a practical standpoint, if one is receiving circa $50-$60k in retirement income in the US, is UK taxation something to get overly concerned about? I note that last year (2022) my AGI (Adjusted Gross Income) was about $50k and my federal tax bill was about $2k, so I can't imagine the UK would want much more than that? I will eventually be subject to significant 'RMD' (required minimum distribution) withdrawals, but that's well into the future for now.

Originally Posted by OldEastEnder
Well, that was an education. I've never seen such a set of byzantine rules (thanks tht) like the SRT. I had assumed that if I spent fewer than 182 days in the UK (with one tie) I would be a non-resident for tax purposes and my wife would be able to visit for up to 6 months as a "Standard Visitor". I was already aware of NHS ineligibility.

The best-laid plans of mice and men.....as the saying goes.
Do please keep us posted on what you decide - interesting challenges!
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Old Jun 22nd 2023, 6:59 am
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Default Re: Living in the UK as a Non-Resident

Originally Posted by Steerpike

Other than the state/local tax issues in the US, from a practical standpoint, if one is receiving circa $50-$60k in retirement income in the US, is UK taxation something to get overly concerned about? I note that last year (2022) my AGI (Adjusted Gross Income) was about $50k and my federal tax bill was about $2k, so I can't imagine the UK would want much more than that? I will eventually be subject to significant 'RMD' (required minimum distribution) withdrawals, but that's well into the future for now.


Do please keep us posted on what you decide - interesting challenges!
$50 to $60k would be about £40 to £48k so yes, UK tax would be significant particularly if you are still stuck paying US healthcare insurance as well. People are taxed as individuals so that income from one person minus the personal allowance will mean about £30k taxed at 20%, so £6k in UK taxes.

Before we moved back I moved everything I could into my wife’s name only so I only had my pensions, and all the capital gains, dividend and interest payments etc fell into my wife’s personal allowance.

Last edited by durham_lad; Jun 22nd 2023 at 7:03 am.
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Old Jun 22nd 2023, 1:33 pm
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Default Re: Living in the UK as a Non-Resident

Originally Posted by durham_lad
$50 to $60k would be about £40 to £48k so yes, UK tax would be significant particularly if you are still stuck paying US healthcare insurance as well. People are taxed as individuals so that income from one person minus the personal allowance will mean about £30k taxed at 20%, so £6k in UK taxes.

Before we moved back I moved everything I could into my wife’s name only so I only had my pensions, and all the capital gains, dividend and interest payments etc fell into my wife’s personal allowance.
Thanks for the info. Based on your info, and looking at the 2023 tax rates for UK on this page, it appears the personal allowance is £12,570, and pretty much anything above that (until you reach £150,000) is taxed at 20% - is that how I read the table? So $60k -> £48k minus £12,570 = £35,430. £35,430 * .20 = £7k tax.

Interestingly, looking at the US tax table for 2023 here, $60k US income should yield a tax payment in the US of about $5,700 so I'm not sure why my tax last year was so low - probably had something to do with capital gains, which are taxed very favorably in the US, or some one-off credits maybe.

Assuming we are talking about a £7k UK tax burden and/or a $5.7k US tax burden, presumably this would be either/or, based on tax treaties, etc? That is, one would offset the other?

And if one were to spend exactly half the year in the UK (and be considered 'resident' for various reasons), there's no pro-ration in play - the full UK tax burden of £7k would be applicable (before considerations for any tax treaties, etc) even though you were only there for 6 months?

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Old Jun 23rd 2023, 7:29 am
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Default Re: Living in the UK as a Non-Resident

Originally Posted by Steerpike
Thanks for the info. Based on your info, and looking at the 2023 tax rates for UK on this page, it appears the personal allowance is £12,570, and pretty much anything above that (until you reach £150,000) is taxed at 20% - is that how I read the table? So $60k -> £48k minus £12,570 = £35,430. £35,430 * .20 = £7k tax.

Interestingly, looking at the US tax table for 2023 here, $60k US income should yield a tax payment in the US of about $5,700 so I'm not sure why my tax last year was so low - probably had something to do with capital gains, which are taxed very favorably in the US, or some one-off credits maybe.

Assuming we are talking about a £7k UK tax burden and/or a $5.7k US tax burden, presumably this would be either/or, based on tax treaties, etc? That is, one would offset the other?

And if one were to spend exactly half the year in the UK (and be considered 'resident' for various reasons), there's no pro-ration in play - the full UK tax burden of £7k would be applicable (before considerations for any tax treaties, etc) even though you were only there for 6 months?
Your UK taxes would also be much lower if you have a big piece of capital gains because you have a capital gains tax free allowance of £6,000 and then 10% of the rest. So, if you are in the 20% income tax bracket and you sell £30k worth of shares whose cost of purchase was £20k then you have a capital gain of £10k so would pay 10% of £4k which is £400. Dividends from stock funds also get much lower tax rates in the UK.(8.75%)
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Old Jun 23rd 2023, 9:03 am
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Default Re: Living in the UK as a Non-Resident

Originally Posted by durham_lad
Your UK taxes would also be much lower if you have a big piece of capital gains because you have a capital gains tax free allowance of £6,000 and then 10% of the rest. So, if you are in the 20% income tax bracket and you sell £30k worth of shares whose cost of purchase was £20k then you have a capital gain of £10k so would pay 10% of £4k which is £400. Dividends from stock funds also get much lower tax rates in the UK.(8.75%)
Interesting. So basically, if you are retired and not making (withdrawing from retirement funds) a whole lot of money, UK and US taxes are not that different, so as long as the two taxes are not additive, residency / tax liability doesn't seem to be an overriding concern?

I did read about the 'stamp duty' issues, and it does seem like you pay a hefty (one-time) premium for a) buying as a non-resident and b) paying over the minimum thresholds on purchase price.

My biggest concern is maintaining a house 5,000 miles away. I didn't like it when I had a 2nd home just 700 miles away in AZ, but at least I could get there within a day without much fuss. I would rely on relatives to keep an eye on things I guess. I'm quite intrigued by the notion of simply giving the money to my nieces and having them buy bigger/nicer homes than they currently have, in return for a 'place to stay'! I want to give them something anyway, so this might just fit the bill. Am I allowed to give a relative say, $200k as a gift? If I structured it as an investment, I guess that opens up a whole heap of issues relating to US tax treatment of overseas investments. For now, I'll just rely on hotels!
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Old Jun 23rd 2023, 11:20 am
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Default Re: Living in the UK as a Non-Resident

You can gift just over $11M in your lifetime without having to pay tax on the gift, and that could all be in one amount at one time. $200,000 would barely put a dent in that. The UK has no income tax on gifts so it should be ok at that end.

But why not just rent a house or apartment on Airbnb, VRBO or another similar platform. there are lots of very nice places out there, and unless you are very nieve is very safe to do. Many owners will provide discounts for long stays, especially for repeat guests. That would be more cost effective and less hassle than buying somewhere that lies empty a lot of the time once you factor in all expenses. Or, perhaps flip it around, buy a property and rent it out on Airbnb, VRBO etc when you are not using it and use a property manager to manage it for you so it is hands off. You might even make a profit out of that and you could bequeath it to your nieces if you wanted to. Other than paying normal CGT on a future sale and income tax on any income, you don’t have to worry about the reporting rules and tax issues associated on foreign investments because property does fall into that remit.

What could possibly go wrong giving money to relatives and expecting a place to stay whenever you require?

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Old Jun 24th 2023, 5:01 am
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Default Re: Living in the UK as a Non-Resident

Originally Posted by Steerpike
Interesting. So basically, if you are retired and not making (withdrawing from retirement funds) a whole lot of money, UK and US taxes are not that different, so as long as the two taxes are not additive, residency / tax liability doesn't seem to be an overriding concern?

I did read about the 'stamp duty' issues, and it does seem like you pay a hefty (one-time) premium for a) buying as a non-resident and b) paying over the minimum thresholds on purchase price.
Yes, if it is a second house, regardless if your other house is overseas, then you will pay more stamp duty when you buy it. How much it affects you depends on where you are moving from and to, and what the exchange rates are like when you buy a house. In November our daughter sold her small 100 year old 3 bed house in Mid-City LA for $1.2m (~£960) and in January completed her purchase of a large, 22 year old, house here in in N Yorkshire for £395k. (5 rooms downstairs plus large brand new kitchen, 4 bedrooms (2 with en-suite), 3.5 bathrooms and a huge garage (even by US standards). She also effectively has 3 gardens (back, front and side) with mature trees, some with protection orders on them as she is within the N. York Moors National Park boundary.

As for taxes on retirement income what I did as soon as my income dropped dramatically when I retired at age 55 in January 2010 was to start aggressively doing Roth conversions because they are totally free of tax in both countries. I use TurboTax to file my files so I would enter everything in and then add my Roth conversion amount and see how much extra tax would be paid and it varied from year to between about 14% and 17% on the conversion amounts. After 7 years I was 100% Roth. If I had not done that then when RMDs kicked in at age 72 and I would be forced to start withdrawals I would be paying 40% UK tax because by then I will be in the 40% bracket with my UK private pension starting in 2017 followed a four years later by my OAP and then SS when I turn 70 plus very favorable exchange rates.

Originally Posted by Steerpike
My biggest concern is maintaining a house 5,000 miles away. I didn't like it when I had a 2nd home just 700 miles away in AZ, but at least I could get there within a day without much fuss. I would rely on relatives to keep an eye on things I guess. I'm quite intrigued by the notion of simply giving the money to my nieces and having them buy bigger/nicer homes than they currently have, in return for a 'place to stay'! I want to give them something anyway, so this might just fit the bill. Am I allowed to give a relative say, $200k as a gift? If I structured it as an investment, I guess that opens up a whole heap of issues relating to US tax treatment of overseas investments. For now, I'll just rely on hotels!
Great suggestions from GG above.

We made a sizable gift to our son when he moved over in 2017 and there is no tax liability at all as long as you stay under the lifetime allowance of ~$11m. I just filed form 709(?) with my IRS return to record the gift. Being resident in the UK that does affect me in that no tax is owed at the time but a clock starts ticking and if we live 7 years after the gift it drops off the radar altogether.

Before we retired in 2010 we knew that we would be traveling extensively so sold our house and put in the proceeds into a mutual fund for later use and rented a condo in a complex which takes care of all maintenance, has a gym, pool and other facilities. We would go away each year for 5 to 7 months at a time and just let the front office know we were leaving so they would keep an eye on the place. Our son would come round every week to empty the mailbox and let us know of anything that looked important and every month or so swap cars with ours and drive it for a week. For our travels (USA, Canada, UK, Europe, Australia and New Zealand) we rented for weeks or months at a time using VRBO mostly. In 2011 we did spend 6 months in a rented house in N Yorkshire to see how it would be if we did move back. In 2016 we decided to do the thing where we spent 6 months in England each year and rented a house again while we bought a house here, but after a few weeks decided to make the move permanent and went back to Texas for a few months to wrap things up there.

ETA
By sheer good fortune the mutual fund with our house proceeds in had doubled in value over the 10 years it sat there. I moved it into my wife's name only so that when we began selling shares she had her personal allowance of ~£12,500 plus additional cap gains allowance of ~£12,500 then 10% taxes on the remaining cap gains. (The cap gains allowance has only just been slashed to £6k for this current UK tax year)

Last edited by durham_lad; Jun 24th 2023 at 5:09 am.
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Old Jun 24th 2023, 1:09 pm
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Default Re: Living in the UK as a Non-Resident

First of all, many thanks to both GG and DL for such excellent information! I hope this recent discussion is not hijacking the original thread.
Originally Posted by durham_lad
Yes, if it is a second house, regardless if your other house is overseas, then you will pay more stamp duty when you buy it. How much it affects you depends on where you are moving from and to, and what the exchange rates are like when you buy a house. In November our daughter sold her small 100 year old 3 bed house in Mid-City LA for $1.2m (~£960) and in January completed her purchase of a large, 22 year old, house here in in N Yorkshire for £395k. (5 rooms downstairs plus large brand new kitchen, 4 bedrooms (2 with en-suite), 3.5 bathrooms and a huge garage (even by US standards). She also effectively has 3 gardens (back, front and side) with mature trees, some with protection orders on them as she is within the N. York Moors National Park boundary.
VRBO/AirBnB sound like good alternatives to buying. I presume there's no easy way around renting a car; no-one in my family has room for an extra car so just renting at around $80/day seems like a necessary cost.

On our recent trip to UK, in addition to the 'obvious' beauty spots like the Scottish highlands, the Lake District, and the Cotswolds, we drove through the Yorkshire Dales (eg, Hawes) and it was beautiful. I also visited a niece who lives on the outskirts of Manchester, but smack up against the Derbyshire / Peak District border, and it too was awesome. Then I visited another niece who lives near Sheffield (a dump of a place) but again, right up against the Peak District border on the other side (South Yorks) and it was gorgeous. Then we spent days in Derbyshire in general, which was also gorgeous. I looked at some property prices, and they seemed 'very reasonable' (especially coming from California!). For the first time since I left in '83, I actually thought "I could live here". But - the sun was shining the whole time and I really hate the cold and the rain, so I need to keep that in mind! Also worth noting, we had fantastic food during the entire visit, with the best food found in the north (the opposite of what I would expect - lots of great seafood in Scotland, for example). How is your daughter dealing with the weather? I guess it's early days yet if she just arrived in Jan!
Originally Posted by durham_lad
As for taxes on retirement income what I did as soon as my income dropped dramatically when I retired at age 55 in January 2010 was to start aggressively doing Roth conversions because they are totally free of tax in both countries. I use TurboTax to file my files so I would enter everything in and then add my Roth conversion amount and see how much extra tax would be paid and it varied from year to between about 14% and 17% on the conversion amounts. After 7 years I was 100% Roth. If I had not done that then when RMDs kicked in at age 72 and I would be forced to start withdrawals I would be paying 40% UK tax because by then I will be in the 40% bracket with my UK private pension starting in 2017 followed a four years later by my OAP and then SS when I turn 70 plus very favorable exchange rates.
I need to start really evaluating Roth IRA conversions. This year is my last year of bonkers US medical premiums - I'll be on Medicare next year and that's a big savings. It's all about paying a moderate amount of extra tax now vs significantly more taxes in the future. By the time I hit 72 I'll be receiving a substantial SS payment and a modest UK pension AND be forced to withdraw way more from my IRA than I want or need. If I don't do the Roth conversions now, I'll just be withdrawing money from my IRA in the future, paying taxes on it, and then sticking it back into savings. I see (yet another) big spreadsheet in my future ...
Originally Posted by durham_lad

Before we retired in 2010 we knew that we would be traveling extensively so sold our house and put in the proceeds into a mutual fund for later use and rented a condo in a complex which takes care of all maintenance, has a gym, pool and other facilities. We would go away each year for 5 to 7 months at a time and just let the front office know we were leaving so they would keep an eye on the place. Our son would come round every week to empty the mailbox and let us know of anything that looked important and every month or so swap cars with ours and drive it for a week. For our travels (USA, Canada, UK, Europe, Australia and New Zealand) we rented for weeks or months at a time using VRBO mostly. In 2011 we did spend 6 months in a rented house in N Yorkshire to see how it would be if we did move back. In 2016 we decided to do the thing where we spent 6 months in England each year and rented a house again while we bought a house here, but after a few weeks decided to make the move permanent and went back to Texas for a few months to wrap things up there.
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If I were in Texas I might be tempted to do what you did, but I do love the Bay Area; not just the weather but the food, and the people (the energy and diversity). But - now that I'm not working at all, I have time on my hands, and spending months at a time elsewhere is a viable option so I need to figure out the best way to make it work. How did you locate the house you rented?
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