Dan.sadler

Hi,
We have been living in the US since Jan of 19, and currently reside in Florida. We are here on L1 visa’s and have a green card in process. We moved at the request of my employer.

We kept our UK home and are now trying to decide what to do with it. It has been rented out since a few months after we left and we are now considering selling it.

I’ve read a few of the posts from people in similar situations and I’ve already concluded I need help from someone that understands the tax laws in the UK and the US so we can decide whether to sell now, or just to keep renting and see what happens later.

Can anyone recommend anyone that could help us?

Thank you

Dan

Glasgow Girl

Can’t help with a recommendation but I can at least help out with a few facts. You will be subject to Capital Gains on the sale in the UK because you are no longer a UK tax resident, and you must declare the sale to HMRC within 30 days of the sale. You will also be subject to US capital gains because you have not lived in the property for 2 out of the past 5 years. You will get credit in the US for any tax paid to the UK. The net result will be that your total tax bill will be the higher of the two amounts but not the total of the two amounts. It’s actually not too complex. A good real estate agent in the UK should be able to help you at that end, and declaring the sale on your taxes in the US is not hard, assuming you have been declaring the rental income in prior years. In any case convert the purchase price to USD using the exchange rate at the time of purchase, and the same with the selling price on the date of the sale. The difference is your gain which will be taxed at normal capital gains rates.

You also have to determine if you have a foreign currency gain on any mortgage pay off. To calculate that take your mortgage amount at pay off, calculate what it was in USD using the exchange rate on the date of origination, take the same pay off amount and translate into USD at the exchange rate on the date of pay off and subtract that from the first number. If the result is positive you have a foreign currency gain which will be taxed at ordinary income levels. If negative there is no foreign currency gain but no deduction or any benefit from a negative amount. The theory is that you made a foreign currency gain because you needed less USD to pay off your mortgage than you did when you originated it. A decent domestic CPA should easily be able to help with the house sale and potential foreign currency gain.

Historical exchanges rates are easy to find on the internet, they can be approximated, don’t have to be exact so long as you have a sound explanation for why you used what you did

Pulaski

Further to Glasgow Girl's comprehensive post above, which I think covers everything I can think of, the only real question, which only you can answer, is whether you want to bite the bullet and pay the tax, so you can release your capital, or postpone the sale, perhaps indefinitely, until, for example, you might return to the UK, or retire and are able to return temporarily and reoccupy it for 24 months to remove (or reduce, depending on the size of the gain) the US tax liability.

Dan.sadler

Thank you for your help.