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rent or sell UK home

rent or sell UK home

Old Feb 11th 2015, 7:43 am
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Default rent or sell UK home

Hi All,

My wife is currently working in the US and has been for the past 3 months, I hope to join in her in the next 3 months, the big dilema we have at the moment is to sell or rent out our UK home.

Anybodies advice on recommondations on what we need to consider will be greatly appreciated:

Thanks in advance
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Old Feb 11th 2015, 9:34 am
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Default Re: rent or sell UK home

I am having the same dilemma. We are going to rent it out for 12 months and then review it then. Use it as a safety net "just in case". Its unpredictable what is happening with the economy at the moment and UK property prices seem to be going up (in our area).

I would see a few estate agents to see what you could get renting it out and also a price for selling then make the call
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Old Feb 11th 2015, 11:45 am
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Default Re: rent or sell UK home

Originally Posted by jtj1
Hi All,

My wife is currently working in the US and has been for the past 3 months, I hope to join in her in the next 3 months, the big dilema we have at the moment is to sell or rent out our UK home.

Anybodies advice on recommondations on what we need to consider will be greatly appreciated:

Thanks in advance
If you can avoid US capital gains tax on the property it really just comes down to whether you are ok with the hassle of renting the property so far away. Of course all income and deductions should be entered on your US taxes.
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Old Feb 11th 2015, 12:02 pm
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Default Re: rent or sell UK home

Hi All,

Thanks for the fast replies to date:

What sort of taxes do I need to be aware in the UK or the US?

Thanks
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Old Feb 11th 2015, 12:20 pm
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Default Re: rent or sell UK home

Assuming you will have already lived in it for two years (730 days) before moving to the US, you will either need to sell it before the third anniversary of you moving out of it (1095 days later) OR wait until you leave the US to avoid US CGT. If you were to return to the UK you might be able to avoid all or part of the CGT potentially assessable depending on the rules at the time and the reliefs available. ..... The low risk option is to sell in the first 1095 days.
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Old Feb 11th 2015, 12:38 pm
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Default Re: rent or sell UK home

Originally Posted by jtj1
Hi All,

Thanks for the fast replies to date:

What sort of taxes do I need to be aware in the UK or the US?

Thanks
You are potentially liable to capital gains tax on the sale of a house in both the US and the UK if you move to the US before you sell your UK home.

In the UK you don't get taxed on the sale of the house you live in that's "Private Residence Relief", but if you let the property capital gains tax will apply if you sell it more than 3 years after you start renting it out. If you are non-resident capital gains tax doesn't apply unless you've been UK resident within the last 5 years.

For the US a married couple gates a tax free capital gain allowance of $500k on a primary residence and that's defined as a home you've lived in for 2 out of the last 5 years. If you don't meet that criterion you can still get a reduced tax free allowance in circumstances like having to move more than 50 miles for work, divorce etc.

Your safest and simplest course is to sell the house while you are UK resident and not US resident. If you keep the house you need to fully understand your circumstances and timing to avoid a tax bill.
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Old Feb 11th 2015, 4:03 pm
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Default Re: rent or sell UK home

We are also at this point in our relocation and not quite sure what to do. We've come up with a number of options:

Option 1:
Keep our current house and rent it out, selling within the 3 year period.

Option 2:
Sell our current house which should net approx $250,000 after the mortgage is repaid. Bank this money as we know we will rent in the U.S. when we relocate as not sure this will be our final location.

Option 3:
Sell our house here and buy a property in Mouseland that we can rent out and use ourselves for long weekends/vacations.

Option 4:
Sell our current house here (in England)and buy a smaller rental property near family in Scotland for around £50k (probably mortgage free) to keep a foot on the UK property ladder just in case.

What do people think? Would love to hear what you think are the pros and cons of each option.

Last edited by Springy6; Feb 11th 2015 at 4:03 pm. Reason: Spelling error - the teacher in me can't leave it!
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Old Feb 11th 2015, 4:18 pm
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Default Re: rent or sell UK home

If you want advice about the tax implications of the various option you need to tell use how long you've lived in you current home and your tax residency status when/if you sell.

One general comment I'd make is that being a line distance landlord can be a pain and if you do it make sure you employ a good management firm to take care of all the issues.
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Old Feb 11th 2015, 4:23 pm
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Default Re: rent or sell UK home

Nun, we'll have been in our current house for over 13 years when we move this summer and are moving over on an immigrant visa.
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Old Feb 11th 2015, 6:44 pm
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Default Re: rent or sell UK home

Originally Posted by Springy6
Nun, we'll have been in our current house for over 13 years when we move this summer and are moving over on an immigrant visa.
Well there shouldn't be any issues with capital gains in the US as long as you sell in the in the next 3 years. Your questions are realy more about lifestyle, but work out the ax and financial implications of any major sale before you do it.
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Old Feb 11th 2015, 8:34 pm
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Default Re: rent or sell UK home

Hi Nun

I will have lived in my current UK home for 5 years, my wife is currently in the US since November, I hope to join her in the next 4 months.

Our longer term plan is to become permanent residents, we are on l1 visa's

House is worth around £157,000
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Old Feb 12th 2015, 11:56 am
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Default Re: rent or sell UK home

We rented our UK house for four years while in France. It was nothing but a pain from start to finish, cost us way more than it brought in in rent and we had to put up with some really bad (famous in one case) tenants. And we lost additional depreciation, but that could have gone either way of course. We wish we had sold the minute we left.
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Old Feb 12th 2015, 4:55 pm
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Default Re: rent or sell UK home

It depends on the location but if you want to keep a foot in the UK property market do not sell.
If we had sold our place in Bucks 20 plus years ago it would cost us a lot more to buy now.
Granted there are tax issues and we pay 15% of the rent in management fees. Plus there is maintenance which can be expensive an example of which is a new boiler for 2400 UK pounds we just paid for.
A good agency will vet tenants carefully there of plenty around from small independents to large chains.
We like to have the option of spending a few months in the UK and using it as a base for European travel. Plus we have four children who will be starting work in the not too distant future so it gives them more options.
In our area the rental market is good.
There are going to be some areas where property prices are stagnant or declining and a low rental demand I am sure in which case sell.
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Old Feb 13th 2015, 7:21 pm
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Default Re: rent or sell UK home

We're in a similar position - we'd rather not sell just yet because we don't know where we want to buy. I used to be a lettings estate agent (and yes, most of them will stab their own mothers in the back for the next deal... but I digress) so have a good idea of what to expect. It's good to know we've got 3 years to decide what to do before having CGT to contend with though. As ottotheboar says - any estate agent worth their socks will do a decent check on tenants, but sadly there are a lot of estate agents that aren't... Make sure you get details of exactly what is included in the reference check and ask to see the report (you're entitled to).
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Old Feb 13th 2015, 8:34 pm
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Default Re: rent or sell UK home

I rented my house out for two years and used a management company.
I had to spend a bit of money getting it together, I seem to remember having to install a carbon monoxide detector.
I didn't make much money monthly and didn't declare it on my US tax returns. I'm sure at the time i wasn't even aware that i was supposed to.
After two years i sold the house for 10,000 pounds profit and used that as a down payment to avoid paying too much PMI on my new house here.
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