Selling a UK property but getting US tax demands
#16
Re: Selling a UK property but getting US tax demands
we brought our uk house in 2001. NO usa was on the horizon or even dreamed of. we ended up coming here in 2007 and rented it out, finally selling it in 2014.
we also got wallopped by exchange rates too - was 1.44 in jan 2001 and is higher now - so the gain we did make is magnified. We are trying to get our accountant to give us an estimate of cgt so we can make sure we have enough put by - but we could be looking north of 50k EASILY
It does feel unfair - as we had no idea we would like in the usa or anything in 2001 - and didn't keep any receipts for the renovations we undertook (new kitchen, new boiler, re-done parquet floors, new doors and windows, rewired electrics - which we could have written off against it too.
(have you done all that - you can write of the cost of the estate agents fees and any house upgrades you made etc too which may be able to deduct from your 'profit' )
we also got wallopped by exchange rates too - was 1.44 in jan 2001 and is higher now - so the gain we did make is magnified. We are trying to get our accountant to give us an estimate of cgt so we can make sure we have enough put by - but we could be looking north of 50k EASILY
It does feel unfair - as we had no idea we would like in the usa or anything in 2001 - and didn't keep any receipts for the renovations we undertook (new kitchen, new boiler, re-done parquet floors, new doors and windows, rewired electrics - which we could have written off against it too.
(have you done all that - you can write of the cost of the estate agents fees and any house upgrades you made etc too which may be able to deduct from your 'profit' )
#17
Re: Selling a UK property but getting US tax demands
Thank you everyone for your views on my situation!
I didn't rent out my property at all - I just left it unoccupied with all my furniture in it for my first year in the US (and lived in it during my visits back to the UK during that year).
It's Ernst and Young who are preparing my tax returns and telling me I will need to pay this. Based upon errors in previous years though, I'm not very confident in what they tell me.
I didn't rent out my property at all - I just left it unoccupied with all my furniture in it for my first year in the US (and lived in it during my visits back to the UK during that year).
It's Ernst and Young who are preparing my tax returns and telling me I will need to pay this. Based upon errors in previous years though, I'm not very confident in what they tell me.
For capital gains tax purposes, the base cost of the asset is normally calculated in U.S. dollars (at the original exchange rate) and this can create a gain in U.S. dollars even if there is a loss in the original currency. It can just as easily go the other way.
However, as others have said, if you qualify for the exemption/deduction on your own residence (2 years in the last 5), there should not be a capital gain. Or, if there is, you can usually deduct the $250k ($500k if filing married/joint).
Have the accountants explained exactly why there is taxable income? Have you given them information in the right format? And if you're not happy with their services, have you considered alternatives?
#18
Re: Selling a UK property but getting US tax demands
I might be missing something, but it looks as if the OP can claim a $250k tax free allowance on any gains from the sale of the property as it was a main residence and was occupied for at least 2 years out of the past 5.