Selling my flat
#1
Just Joined
Thread Starter
Joined: Oct 2006
Posts: 3
Selling my flat
I came over to the US last October and since then I have married the lovely American who was the reason for my initial move!
And to cut a long story short (!!??) I have been granted my Green Card.
My question now is regarding a flat I still own in the UK. I have not been living there for over a year now and am renting it out. According to advice I sought over there, because the flat was my primary (and only!) residence, I have 3 years before I would be subject to CGT on any profits on the sale of it. Does anyone know what my tax liability would be over here? And would my Residency period count from the day I was approved for the Green Card or from the time I married my husband (which was whilst I was here on the VWP?)
If anyone has been in the same situation it would be great to hear from you!
Thanks
And to cut a long story short (!!??) I have been granted my Green Card.
My question now is regarding a flat I still own in the UK. I have not been living there for over a year now and am renting it out. According to advice I sought over there, because the flat was my primary (and only!) residence, I have 3 years before I would be subject to CGT on any profits on the sale of it. Does anyone know what my tax liability would be over here? And would my Residency period count from the day I was approved for the Green Card or from the time I married my husband (which was whilst I was here on the VWP?)
If anyone has been in the same situation it would be great to hear from you!
Thanks
#2
Lost in BE Cyberspace
Joined: Jun 2005
Location: Oz -> UK -> San Diego
Posts: 9,912
Re: Selling my flat
Originally Posted by Sazzybnewyork
I came over to the US last October and since then I have married the lovely American who was the reason for my initial move!
And to cut a long story short (!!??) I have been granted my Green Card.
My question now is regarding a flat I still own in the UK. I have not been living there for over a year now and am renting it out. According to advice I sought over there, because the flat was my primary (and only!) residence, I have 3 years before I would be subject to CGT on any profits on the sale of it. Does anyone know what my tax liability would be over here? And would my Residency period count from the day I was approved for the Green Card or from the time I married my husband (which was whilst I was here on the VWP?)
If anyone has been in the same situation it would be great to hear from you!
Thanks
And to cut a long story short (!!??) I have been granted my Green Card.
My question now is regarding a flat I still own in the UK. I have not been living there for over a year now and am renting it out. According to advice I sought over there, because the flat was my primary (and only!) residence, I have 3 years before I would be subject to CGT on any profits on the sale of it. Does anyone know what my tax liability would be over here? And would my Residency period count from the day I was approved for the Green Card or from the time I married my husband (which was whilst I was here on the VWP?)
If anyone has been in the same situation it would be great to hear from you!
Thanks
1. cos u rented it out, there is some kind of allowance. (rental relief??)
2. the CGT involves tapered relief....ie it's not automatically x% or ALL the CG.
3. yes, after three yrs of non-occupancy for CGT.
4. remember, holding on to a property may or may not be advantageous in your situation. (ie holding onto it for longer in hope of a rise, rather than selling it now for what it's worth etc.) It depends on what u might want to do with the funds
5. now that u are married, for UK purposes, only one home can be your prime home. (ie if both u and ur hubby each own a home, only one can be classified as being your primary residence.)
#3
Re: Selling my flat
Sale of your primary residence is tax exempt up to $250,000 of gain (sales price less (cost + allowable expenses)) if you lived in it for two of the last five years. .... So effectively Uncle Sam is also giving you three years to sell it.
There are complex rules about making it allowable for your husband too, but if it is worth it (if the gain is over $250,000) then you will need to find a knowledgable tax accountant to work out if it ispossible for you to do.
There are complex rules about making it allowable for your husband too, but if it is worth it (if the gain is over $250,000) then you will need to find a knowledgable tax accountant to work out if it ispossible for you to do.
#4
Lost in BE Cyberspace
Joined: Jun 2005
Location: Oz -> UK -> San Diego
Posts: 9,912
Re: Selling my flat
Originally Posted by Pulaski
Sale of your primary residence is tax exempt up to $250,000 of gain (sales price less (cost + allowable expenses)) if you lived in it for two of the last five years. .... So effectively Uncle Sam is also giving you three years to sell it.
There are complex rules about making it allowable for your husband too, but if it is worth it (if the gain is over $250,000) then you will need to find a knowledgable tax accountant to work out if it ispossible for you to do.
There are complex rules about making it allowable for your husband too, but if it is worth it (if the gain is over $250,000) then you will need to find a knowledgable tax accountant to work out if it ispossible for you to do.
#5
Re: Selling my flat
Originally Posted by Sazzybnewyork
I came over to the US last October and since then I have married the lovely American who was the reason for my initial move!
And to cut a long story short (!!??) I have been granted my Green Card.
My question now is regarding a flat I still own in the UK. I have not been living there for over a year now and am renting it out. According to advice I sought over there, because the flat was my primary (and only!) residence, I have 3 years before I would be subject to CGT on any profits on the sale of it. Does anyone know what my tax liability would be over here? And would my Residency period count from the day I was approved for the Green Card or from the time I married my husband (which was whilst I was here on the VWP?)
If anyone has been in the same situation it would be great to hear from you!
Thanks
And to cut a long story short (!!??) I have been granted my Green Card.
My question now is regarding a flat I still own in the UK. I have not been living there for over a year now and am renting it out. According to advice I sought over there, because the flat was my primary (and only!) residence, I have 3 years before I would be subject to CGT on any profits on the sale of it. Does anyone know what my tax liability would be over here? And would my Residency period count from the day I was approved for the Green Card or from the time I married my husband (which was whilst I was here on the VWP?)
If anyone has been in the same situation it would be great to hear from you!
Thanks
If you are ever audited by the IRS they can only go back 3 years, unless they find that you have understated any tax return by 25%, then they can go back another 3, no matter what happens they can't audit any further back than 6 years (so my accountant tells me).
So if you do decide to wing it, make sure you are squeaky clean on every tax return you file for the following 3 years.
#6
Re: Selling my flat
Originally Posted by Pulaski
Sale of your primary residence is tax exempt up to $250,000 of gain (sales price less (cost + allowable expenses)) if you lived in it for two of the last five years. .... So effectively Uncle Sam is also giving you three years to sell it.
There are complex rules about making it allowable for your husband too, but if it is worth it (if the gain is over $250,000) then you will need to find a knowledgable tax accountant to work out if it ispossible for you to do.
There are complex rules about making it allowable for your husband too, but if it is worth it (if the gain is over $250,000) then you will need to find a knowledgable tax accountant to work out if it ispossible for you to do.
This is only true if the house is your primary residence, if the house is an investment property then forget any exemptions.
What you can do is file what's called a "1031 exchange", you must employ someone to handle this, it's usually a lawyer but doesn't have to be. When you transfer the money you transfer it to the lawyer, he will hold it for 90 days. If you buy another house out here within 90 days and have the lawyer handle the transaction, you will pay nothing in the way of anything, other than the lawyers fees and closing costs. If you don't re-invest the money into another property within 90 days the money will be given back to you and you will be taxed.
Because profits from the sale of a house is classed as income, you can be taxed, if you never see the money (because the lawyer has it in escrow), you have not received any income, thus you cant be taxed. It's merely a means of giving you 90 days to move the money from one place to another without getting slapped with a tax bill.
http://www.realtor.org/libweb.nsf/pages/fg408#topica
EDIT.... Here is a better link.
http://www.realtyexchangers.com/
Last edited by Rodney you plonker; Oct 8th 2006 at 2:21 pm.
#7
Re: Selling my flat
Originally Posted by Rodney you plonker
....
What you can do is file what's called a "1031 exchange", you must employ someone to handle this, it's usually a lawyer but doesn't have to be. When you transfer the money you transfer it to the lawyer, he will hold it for 90 days. If you buy another house out here within 90 days and have the lawyer handle the transaction, you will pay nothing in the way of anything, other than the lawyers fees and closing costs. If you don't re-invest the money into another property within 90 days the money will be given back to you and you will be taxed....
http://www.realtyexchangers.com/
What you can do is file what's called a "1031 exchange", you must employ someone to handle this, it's usually a lawyer but doesn't have to be. When you transfer the money you transfer it to the lawyer, he will hold it for 90 days. If you buy another house out here within 90 days and have the lawyer handle the transaction, you will pay nothing in the way of anything, other than the lawyers fees and closing costs. If you don't re-invest the money into another property within 90 days the money will be given back to you and you will be taxed....
http://www.realtyexchangers.com/
Not to add complications but one may be able to do a reverse 1031 xchgs.
www.irs.gov have guidelines etc relating to 1031s.
#8
Re: Selling my flat
Originally Posted by Rodney you plonker
It's $250,000 per named owner, so if there are 2 names on the property deed (say husband and wife), and the same 2 people are filing joint tax returns, then you can claim $500,000. If they are not filing joint tax returns, the money must be split 50/50 then they can file individually for the $250,000. ......
#9
Re: Selling my flat
Originally Posted by Pulaski
You are absolutely right - but I DID say that the tax allowance doubles if there are two named owners - and as the OP said " ..... I married the lovely American ....." it is a fair assumption that the flat bought several years ago was bought in the sole name of the OP, or at very least not jointly with the aforementioned American.
Sorry if I upset you.
#10
Just Joined
Thread Starter
Joined: Oct 2006
Posts: 3
Re: Selling my flat
Thank you all very much for the useful advice, and yes the property is owned in my name only! And was my primary residence for 7 of the past 8 years.
The 1031 exchange may well be a solution for us.
The 1031 exchange may well be a solution for us.
#11
Re: Selling my flat
Originally Posted by Rodney you plonker
I sold a house in the UK a few years ago, I deposited the money into a UK bank account, then transferred it to my account in the USA, I was new to the USA and didn't declare anything
#12
Account Closed
Joined: Mar 2004
Posts: 2
Re: Selling my flat
Originally Posted by Pulaski
Sale of your primary residence is tax exempt up to $250,000 of gain (sales price less (cost + allowable expenses)) if you lived in it for two of the last five years. .... So effectively Uncle Sam is also giving you three years to sell it.
There are complex rules about making it allowable for your husband too, but if it is worth it (if the gain is over $250,000) then you will need to find a knowledgable tax accountant to work out if it ispossible for you to do.
There are complex rules about making it allowable for your husband too, but if it is worth it (if the gain is over $250,000) then you will need to find a knowledgable tax accountant to work out if it ispossible for you to do.