Titch_lite

Morning all,

I have a few questions i hope some of you can help me out with. I am trying to make sure I am fully prepared for my November departure.

1. Can i keep my UK Halifax bank account? I will still have commitments in the UK which i need to pay

2. What other typical costs do i need to be aware off when purchasing a house in the US for cash? solicitors etc

3. I am moving in November this year, i have a NIE. Are the any tax implications i need to be aware of? And can i claim my tax back for the rest of the year

4. Can i continue paying my NI contribtions, what is the cost of doing this?

Thanks in advance

Glasgow Girl

1. Most UK banks/building societies will let you keep your account, and you should keep it because you won't be able to open a traditional UK account once you leave. All you should have to so is to update your address.

2. Closing Fees and Title Insurance. If paying cash Closing Fees should not be too much but will include pro rated property tax for the period you will own the property in the year you buy it, the closing agents fee (not the real estate agent), survey fees and some other miscellaneous costs. Because there is no mortgage these should not be too much but it will depend upon the value of the house. I would think that for a cash purchase 1% of the purchase price would more than cover it. Title fees will also be dependent upon the value of the house, $1,500 is about average for a $200K house. Title insurance protects you against potential (but unlikely) issues associated with the property such as unpaid liens and taxes from previous owners, disputes over who actually owned the property in the past, etc. Attorney fees will be extra, if you use one, but I have bought several properties over here and never used an attorney (most people don’t) the real estate agent and the closing agent will do almost of all the work required. The real estate agent is paid through the commission paid by the seller and the closing agent costs are included in the closing costs. There are some other smallish costs, like a property inspection, (you choice to do it our not) and termite inspection (you should definitely do that one because termites can really do hidden damage to a home). Property inspection is likely to be in the range $300-$500, termite inspection about $100 or so. Be aware of annual property taxes which can be quite high depending upon your locality, ours are 2% of the property price which its much lower than many states, and insurance costs which will be much higher than you are used to in the UK.

3. As soon as you step foot in the US the IRS will tax you on all of your your world wide income from that point forward, including savings and profit on the sale of your house. If you have any savings in anything other than a straightforward bank account you should cash them in before you arrive here because the tax rate on foreign investments are eye wateringly high and the paperwork is mind numbing. Owning shares directly in a company listed on a worldwide stock exchange is ok so long they are not in what they call a shared investment, essentially Unit Trusts, OEICs, Investment Trusts. Google PFICs if you have any such investments. Also, be aware that an ISA is NOT tax free in the USA. If you sell a house you can escape Capital Gains Tax if it was your private residence for at least 2 out of the prior 5 years before the sale.

You should be able to claim a tax rebate from the UK government if you only worked for a partial UK tax year because your tax free allowances will have been spread over the whole 12 months and you will only have used about half of them. In the US the tax year runs Jan - Dec, I cannot remember if you get the full set of personal allowances in your first year, I am sure someone else can advise on that. If you get the full set of allowances you may pay very little US tax in your first year.

Make sure you understand the requirement to report all foreign financial interests on an FBAR and on your annual tax return (savings, pensions, life assurance, investments, ISAs, etc). The penalties for not doing so are draconian as many people moving over here have sadly found out. You need to comply with these requirements right from the get go, trying to fix retrospectively is difficult and extremely expensive.

4. You can and should continue paying Voluntary NI’s. If you can get the Class 2 rate at about 150 pounds a year it is a fantastic deal. if you have to pay Class 3 it is about 750 pounds a year but still a good deal. They have rules for who can pay Class 2 vs Class 3 but Class 2 is available to most people who were employed in the UK immediately before leaving and have made at least 3 years NI contributions. This will help https://www.gov.uk/government/public...ty-abroad-ni38.

Winston_the_Great_Dane

Where in OH are you moving to?

Derrygal

Just saw this thread - that's exactly the question I was going to ask!

TexanScot

From memory you do indeed get the full allowance in the US - it's not allocated pro-rata based on the amount of time you spend in the US during the tax year.

Titch_lite

Morning all,

Sorry for the late reply, been a hectic week.

Thanks Glasgow Girl for such a indepth response, this has helped be out greatly.

I either moving Cleveland or Akron, or somewhere around there, still looking at houses in my price range.

I am dicussing my relocation package with my employer today. One thing i am wondering is, are you taxed the same on a lump sum relocation as you would be for reimbursement relocation? I got a feeling they want to go down the reimbursement route, which obviously i do not. I dont want to ship my kitchen sink over, everything i/we need can be done with extra bagagge on the plane. I dont my paying tax on a lump sum.

My wife is coming over with me for the first week then flying back, we still have commitments in the UK until Jan 22. We will both have a national interest exception stamp in our passports NIE, i take it she can return to the US without me?

Thanks all

Titch_lite

Relocation package, are any of these options tax deductable for the employer? This is the only sticking point i could possilby see.

Glasgow Girl

You have to pay taxes on any funds the employer provides to you as reimbursement expenses, no matter how they structure it. You used to be able to deduct those expenses from your taxable income but that changed a few years back. Because of that many employers will now “gross up” the agreed amount by the amount of anticipated tax. For example, if the agreed amount is $10,000 and you anticipate federal tax at 24%, state tax at 6% and city tax (not always applicable) at 1% then your tax rate would be 31%. You would have to receive $14,500 dollars to net $10,005 because you will be paying $4,495 in taxes to the various entities. However the company reimburses you it is tax deductible to them but not to you. As married couple you will be able to deduct t $25,100 from your taxable income for tax year 2021. Since you will only have taxable income for November and December that should help reduce the amount of tax payable for your first tax year anyway.

Perhaps your company could pay your expenses before you arrive in the USA. That should mean that the UK would tax them and not the IRS. I have no idea how the UK taxes this stuff anymore but that many or may not work out better for you.

Try to negotiate temporary housing, a subsistence allowance and car hire for as long as you can get it, on top of relocation expenses. 4 weeks would be reasonable more is better but not all companies will go for that.

So long as our wide has the “NIE” exemption on her visa she can enter the US without you.

Nutmegger

A sidebar to your query: unless you already know the area really well, I would counsel against planning the immediate purchase of a house. A year down the road, you will have a much better idea of what will work best for you and where you would like to put down roots.

tom169

Agreed. A year of renting won't be the end of the world.

Derrygal

Yes - I agree - renting might be a good idea until you know where you want to buy. It's a seller's market now here in Ohio (and most of the country) and housing inventory is low. House are selling as soon as they go on the market and above asking price too. I live in the Cleveland Eastern suburbs. Send me a PM if you have any questions about the location, schools, etc (you didn't mention children so that may not apply to you). NE Ohio has cold winters and we get a fair amount of snow so pack your warm clothes - although it might actually be cheaper to buy them here.

Titch_lite

Thanks all,

Had my relocation package meeting yesterday, basically 30 days accomodation. I came out of the very quick meeting livid and composed a very very long email.

I release i am going to incur some costs not matter what, but they can bloody sod off.

Got a feeling they were just trying it on, so ball is back in there court after my professional rant. My employer over here already offered to match the salary they are offering, equivalent in sterling.

We got 5 dogs! Wife not me. So hence the need to buy. We will buy and most probably stay in that house up until my greencard is processed, then rent it out or sell it. If it wasnt for the dogs i would just buy a mobile home. Been looking on Trulia, seems to be the best site, offers the crimes rates.

Yeah no children yet, we put all our plans on hold for this. Didnt want to have to worry about moving a baby over.

scrubbedexpat099

Renting with 5 dogs could be tricky, not cheap to ship them out.

Titch_lite

Already got all that arranged, well costed at £4.5k. All snub nosed, so will fly manchester to iceland to either NYC or Detroit. With broker at the other end.

Nutmegger

You will also need to ensure that the town where you choose to live permits ownership of that many dogs -- you may need a kennel license even though they are just personal pets. I moved to a town with a four dog limit -- with five dogs.