epymsam

Does anyone know if the rental profit that I will get from the rental of my principle residence when I move over to NY will be subject to my personal income tax allowance? I.e. if I make less profit than my income tax allowance, could there be a situation where I pay no UK income tax or is it a fixed amount of 22%?

I have very little other income in the UK, a few investments but these are all wrapped in ISAs so I should be fine to leave them be.

Any help would be much appreciated.

Regards,

e.

NC Penguin

Would you really trust comments made by someone on a message board? I would suggest you discuss this with a certified accountant in the UK familiar with the US tax system.

epymsam

Of course I'll check this with an accountant, but I would hvae thought that this would be a relatively common occurrance. I suspect that many people will be renting their homes in the UK when they move abroad, and I was only hoping to get some insight....

Big D

Do you pay even pay UK tax?

We dont have much profit as you can deduct the interest payments for US tax purposes

Tootsie Frickensprinkles

Depends on many things and how you choose to deal with them. Consult a tax advisor.

scrubbedexpat099

You will have problems finding somebody who is familiar with both UK and US tax, and an even bigger problem paying their fees.

I think there may be one person in Colorado, whether they are any good is another issue.

For some reason whenever this subject, of the CGT situation comes up, there is an unwillingness to contribute.

I wonder how many people actually remember to mention to Uncle Sam any overseas earnings or CGT.

But to answer your question, both systems have certain similarities but operate differantly.

The UK system is less generous but you have your personal allowance. The US system is more generous but you will have income to declare. You will probably end up paying tax both ends.

ISA's are an interesting question, they are not IRS approved so my assumtion is that they are subject to US tax, but see above.

epymsam

Has anyone experienced the interest rate probelm of "retiring" a mortgage when disposing of a UK asset. Here's a hypothetical situation.....


Say I buy a flat in 2000 when the dollar is $1.6 to the pound.
In 2002 I move to the US
In 2004 I sell the house and "retire" (or redeem) the mortgage when the dollar is $1.5 to the pound.
According to the IRS, I have made a gain (based on FX rates) as it has cost me less dollars to pay off the mortgage then the dollar equivalent when I took out the mortgage.

Has anyone experienced this or had a CGT issue with the IRS over this one? I guess its not lilely to occur at the current time due to the strong pound, but who knows in a few years time?

Once final comment - does anyine know of a source of historical FX rates $-£?

Thanks

e.

farmerwife

Your question seems to be about your liablity to UK tax?
This IR info is a good read - (IR20)

http://www.hmrc.gov.uk/pdfs/ir20.htm#capital

See section 8.3

If you are filing a US tax return it is on your world wide income -
But then there is the "tax treaty thing" to consider.

No wonder there are not many leaping in with advice - a deep subject indeed!