Britlec1992

We bought in Feb 2016 when the exchange rate was 1.41

chawkins99

Well, that's even better.

Thinking on it again going on the mortgage, not the sale. If you borrowed at $1.41/£ ($241k) but only have to repay at $1.28/£ ($211k) then that is indeed a $30k gain.

So confusing.

Mettski

So there's a couple of things going on here, and I'll try and break them down.

1) Since you re-mortgaged/re-financed in Jan 2018, the exchange rate was 1/0.7954 = 1.257 source: https://www.ofx.com/en-us/forex-news...-average-rates
which is lower than where it is today, approx 1.28-1.29 so you won't owe any tax based on exchange rate
2) chawkins99 has it right, it's on the mortgage and not the sale. since you re-mortgaged at a comparable rate to today it's a non issue, but if you kept your original mortgage at 1.41 then the IRS view that as borrowed more $ than having to repay, and that difference is subject to your income tax rate. Pretty brutal if timing is off.

jammiie

That decision could have just saved you a lot of money!

When you remortgage, you paid off the original loan which was taken at a much higher exchange rate and took out a totally new loan with the exchange rate similar or worse than it is now so you shouldn't owe anything!

sadiigo

I might be wrong here, but I read the original post and the OP's wife is a USC. As such, she would be liable for the forex gain when they re-mortgaged the house in January 2018. This could've been missed. It all depends if she filed as a single person and whether the mortgage was in her name as well. I would certainly speak to the US tax accountants, who have experience with the foreign gains tax implications (not HR block).

jammiie

Also, Capital Gains exemptions on house sales only apply when the property in question was your primary residence for 3 of the last 5 years I believe.

Lots of variables here, I agree that OP should seek advice from a specialist in ex-pat tax obligations.