LeavingLondon

Hi, we moved here in July 2013 and are selling our house (around) June 2015 (we are waiting for the tenants to move out before we can exchange/complete). We're selling it for £430k more than we bought it for (but we've spent money on extending it etc). Will we be subject to US/UK tax on the gain? We are GC holders.

nun

If you cannot claim the house as your primary residence you will not get the $250k (or $500k if you are married) US capital gains tax free allowance.

LeavingLondon

I thought that "US rules require you to have lived in the property for at least two of the past five years and UK exemptions only apply if you have lived in the property for your entire period of ownership."

is that wrong?

http://www.ft.com/cms/s/0/54bedb30-b...#ixzz3YNeWvlEb

old.sparkles

If you lived in the house as your primary home up to when you moved 2 years ago it is likely that you'll get some relief (if not all) from CGT. Try here - https://www.gov.uk/tax-relief-selling-home/y

nun

No that's not wrong. You seem to understand the basics of the situation, so apply those rules and you'll come up with the answer. In both the US and the UK moving from your home for work is taken into account when calculating any capital gains tax. You might also consider the capital gains Article in the US/UK tax treaty to see how to divide any tax you might owe

Pulaski

As you're selling more than two years after you moved out, the calculation has become much more complex for UKCGT purposes (see Mikelincs link), though if you lived in it for several years before relocating to the US you will likely get relief from most (nearly all?) the chargeable gain in the UK, and as you have lived in it for "two of the past five years" you will get relief of $500,000 against US capital gains tax. Given the size of your gain you should be sure to deduct all the allowable improvement expenditures that you can prove/ document to get down, or closer to $500,000 of gains.

Cook_County

But even if there is no US tax on the gain there might be a taxable foreign currency gain on repaying the Sterling mortgage, but you might have some excess foreign tax credits carrying forward to offset from this.

nun

If the capital gain given by the OP is correct there will be some US CGT to pay.

Pulaski

Good call. I corrected my earlier post.

LeavingLondon

Thanks. We lived in it up until we moved in 2013. I'll read that link.

MsElui

also remember the 'gain' will be calculated from the exchange rates at the time of the actual purchase and sale - regardless of where you were at the time - ie if the gain is large in the interest rates you may have to pay tax still as you could use up all the allowance. The physical gain in GBP is mainly irrelevant - as it has to go back to the exchange rate of the dollar value at the time. THAT gain is what the calc i based on.

Pulaski

You mean "exchange rates", don't you?

LeavingLondon

Thanks everyone. We're hoping to complete on the sale just before the 2 year mark. We have a US accountant but not a UK one so thanks for the advice.