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Selling UK Property as Resident Alien and US citizen Tax implications

Selling UK Property as Resident Alien and US citizen Tax implications

Old Apr 2nd 2016, 9:46 pm
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Default Selling UK Property as Resident Alien and US citizen Tax implications

Hello All Expats,
I (resident alien) moved to USA in June 2014 with my US citizen wife for good from UK. (we both are permanent UK resident). we have residential property in the UK which was our main home while we were in the UK but since we left from there we let that property out to tenants.
Now as UK property market is at its peak we have decided to sell the property and bring the money here in the USA.
but we have few questions about the whole situation and hoping to get answer here.
1) Do we pay any capital gain tax in the UK on the gain we make from the sell of the property in the UK?
2) Do we have to pay capital gain or any other income tax in the USA on the income/gain we make on sell of UK property?
3) what is best and legal way to bring the money in to the USA? (we are talking about nearly $ 200k) ?

Please advise.
Thanks in advance.
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Old Apr 4th 2016, 8:50 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

You need tax advice but as I understand it having sold my main residence (and we lived in it which is a subtle difference) to come out here, there is no CGT on primary residence.


You rented yours out so I don't know where your stand.
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Old Apr 4th 2016, 8:54 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Originally Posted by namuma View Post

3) what is best and legal way to bring the money in to the USA? (we are talking about nearly $ 200k) ?

Please advise.
Thanks in advance.
To transfer the money use one of the money exchange specialists. xe.com, transferwise and torfx get frequent mentions here. I have used torfx and been very satisfied.
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Old Apr 4th 2016, 8:56 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Thanks for the reply..

Was there any tax implication when you brought the money over here to the USA?
Thanks.
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Old Apr 4th 2016, 8:57 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Originally Posted by namuma View Post
Thanks for the reply..

Was there any tax implication when you brought the money over here to the USA?
Thanks.
There's no tax implication for simply moving the money across.
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Old Apr 4th 2016, 9:48 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

There could well be US capital gain on the property and any profit from the exchange rate, of which there are previous threads which explain all this much better than I understand.

UK capital gains might also come in to play, as they changed the amount of time you had to sell a place to avoid it, last year I think it was, so you had much less time to sell it. This is also discussed in a few threads on the topic.

Might have luck searching them out.
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Old Apr 5th 2016, 8:33 am
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Ultimately UK Tax will be zero, or close, but a return will need to be filed with HMRC within 30 days of sale showing the calculations.


You will owe US income tax, State tax and NIIT on any gain on the sale and on recaptured depreciation and on any foreign currency gain on repayment of a Sterling mortgage. You might have some excess foreign tax credits from 2014 which could offset some of any tax.
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Old Apr 6th 2016, 4:56 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Isn't the GBP to USD exchange rate a bit on the crappy side currently? Would it be worth banking the cash until the exchange rate is a bit more favorable? Of course, based on financial predictions that may be a few years in coming as the strength of the GBP is going to weaken more over the next year or two. Maybe it would be better holding on to the property for a while.
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Old Apr 6th 2016, 5:05 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Originally Posted by Disenchanted View Post
Isn't the GBP to USD exchange rate a bit on the crappy side currently? Would it be worth banking the cash until the exchange rate is a bit more favorable? Of course, based on financial predictions that may be a few years in coming as the strength of the GBP is going to weaken more over the next year or two. Maybe it would be better holding on to the property for a while.
Unless you think buying $200k of FX futures is a prudent investment, then no, it's a bad idea.

Holding a foreign asset to wait for a better exchange rate is functionally identical to speculating on the exchange rate with the same amount of cash, and very few people would do that. As the OP implied, in the mean time the value of the property may decline, perhaps by more than the exchange rate moves. .... And the longer the time elapses since they moved out of the house, proportionally the more of the gain becomes taxable, so having made the decision to sell they should do so, and get the money out of the UK.
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Old Apr 6th 2016, 5:43 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Unlikely that the value of the property will decline as on average property prices are increasing in the 6%+ range per anum in England. I suppose you really need to compare the UK property increase for their current house to what the trend is in the location they are currently living and also take in to account the exchange rate.

If they don't sell their house and move the money within about 3 months the predicted fall in exchange rate may well erode any increase in the property value for 2016.

I regret selling my property in the UK back in 1985 when I came here to live. I did use a small amount of the proceeds to put a down payment on our house here but in hindsight we could have waited a little longer to save up the deposit if I hadn't sold my house in the UK.

If that house had been rented out for these past 30 years it would certainly have been paid off and at least when the time arrived that I decided to move back to the UK it would be so much easier and if I knew then what I know now I would have held on to it.

Oh well, water under the bridge as they say.
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Old Apr 6th 2016, 5:47 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Originally Posted by Disenchanted View Post
Unlikely that the value of the property will decline as on average property prices are increasing in the 6%+ range per anum in England. .....
And as everyone knows, house prices increase steadily year-on-year predictably and for ever.
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Old Apr 6th 2016, 6:42 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Originally Posted by Pulaski View Post
And as everyone knows, house prices increase steadily year-on-year predictably and for ever.
Neither of these methods reduces the exchange rate timing risk of converting a single large amount. To do so, you should convert it on a schedule - converting a smaller amount, say, once a month, until the conversion is complete. This is particularly relevant here since there are good reasons to argue that the Pound might be worth more in future (it is at historically low levels) or that it might be worth less in future (the exchange rate shows a systematic long-term downward trend).

That said, you do need to balance the reduced timing risk against the bigger conversion spread (or higher fees) when converting smaller amounts.
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Old Apr 6th 2016, 6:54 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Originally Posted by Owen778 View Post
Neither of these methods reduces the exchange rate timing risk of converting a single large amount. To do so, you should convert it on a schedule - converting a smaller amount, say, once a month, until the conversion is complete. This is particularly relevant here since there are good reasons to argue that the Pound might be worth more in future (it is at historically low levels) or that it might be worth less in future (the exchange rate shows a systematic long-term downward trend).

That said, you do need to balance the reduced timing risk against the bigger conversion spread (or higher fees) when converting smaller amounts.
I have often given exactly this advice. Converting in multiple smaller amounts absolutely guarantees that overall you won't get the worst possible rate for the whole amount , at the price of certainty that you won't get the best possible rate either.
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Old Apr 6th 2016, 11:47 pm
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Default Re: Selling UK Property as Resident Alien and US citizen Tax implications

Originally Posted by namuma View Post
Hello All Expats,
I (resident alien) moved to USA in June 2014 with my US citizen wife for good from UK. (we both are permanent UK resident). we have residential property in the UK which was our main home while we were in the UK but since we left from there we let that property out to tenants.
Now as UK property market is at its peak we have decided to sell the property and bring the money here in the USA.
but we have few questions about the whole situation and hoping to get answer here.
1) Do we pay any capital gain tax in the UK on the gain we make from the sell of the property in the UK?
2) Do we have to pay capital gain or any other income tax in the USA on the income/gain we make on sell of UK property?
3) what is best and legal way to bring the money in to the USA? (we are talking about nearly $ 200k) ?

Please advise.
Thanks in advance.
So I'm learning on this forum, but I did have this very conversation with an absolute US tax ninja last week. But first, how can you both be permanent UK residents if you've moved to the US permanently and are living in the US? Presumably you're now permanent US residents although you yourself are a UK citizen?

Anyway, from what I understood from the tax ninja I spoke to last week on this subject, you will have to pay income tax in the US (although not in the UK). The process explained to me was eye-wateringly complicated and does indeed involve an exchange rate calculation inasmuch as the historical exchange rate at the time of purchase and the exchange rate at the time of sale is used to calculate the tax you owe. I lost track somewhat after that point.

I'm sorry I don't have the detailed information you seek, but from what I was told during a discussion on this subject, there would seem to be a liability.
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