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Selling UK property - Taxes, any advice?!

Selling UK property - Taxes, any advice?!

Old Apr 6th 2018, 6:16 pm
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Default Selling UK property - Taxes, any advice?!

Dear All,

I have been reading previous posts but can't find my answer.

Does anyone have experience of selling UK property after they've been living in the USA.

I do know for the first couple of years theres some tax relief, both in UK and USA, if the residence was your primary. But I wondered what happened to those that lets say sold 10 years later or something.

Ive even heard of people going home, living in their homes before they sell to avoid capital gains tax. This might only be worth it for those that have a huge profit margin to make.

Does anyone have any experience of this? Not too sure where to go or who to ask. Any advice appreciated!
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Old Apr 7th 2018, 7:18 am
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Default Re: Selling UK property - Taxes, any advice?!

If you are a US resident, the US would tax any gain, recaptured depreciation and foreign currency gain. The US would allow any suspended passive losses too be claimed as well as any foreign tax credits. The UK would only tax any gain since 6 April 2015.
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Old Apr 7th 2018, 2:53 pm
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Default Re: Selling UK property - Taxes, any advice?!

tgj79, we sold our UK property in 2015 after moving here in 2002. Here is the thread covering my example rough calcs at the time and input from the forum at the time.

http://britishexpats.com/forum/usa-5...operty-783331/

As far as I can remember biggest US affect tax came on CGT (Obama CGT was much higher than Bush - not sure if Trump has reversed that?) and exchange rate difference at time of purchase vs sale. Provided property was previously your primary residence, then the only UK CGT due should be, as Cook_County said above, from any property value increase since April 2015. - my recollection only

Last edited by FatFrank; Apr 7th 2018 at 3:09 pm.
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Old Apr 7th 2018, 3:06 pm
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Default Re: Selling UK property - Taxes, any advice?!

BTW, Based on the exchange rate difference between a UK property purchased in, for example, 2007 (1.9ish echange rate IIRC?) and sold in 2018 (1.40), I would think it a great time to minimize any US tax CGT from a UK property sale.

....but please get some proper advice from a qualified tax adviser i.e. not me!
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Old Apr 7th 2018, 6:46 pm
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Default Re: Selling UK property - Taxes, any advice?!

Thank you all for your replies, its got me on the right track to look into some stuff
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Old Apr 7th 2018, 7:21 pm
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Default Re: Selling UK property - Taxes, any advice?!

The biggest problem today (after the Brexit vote in June 2016) are foreign currency mortgage gains. This is a big change in the tax landscape in the past couple of years...
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Old Apr 7th 2018, 7:26 pm
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Default Re: Selling UK property - Taxes, any advice?!

Originally Posted by Cook_County View Post
The biggest problem today (after the Brexit vote in June 2016) are foreign currency mortgage gains. This is a big change in the tax landscape in the past couple of years...
Eeeek, please explain? Am so new to this!
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Old Apr 9th 2018, 1:48 pm
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Default Re: Selling UK property - Taxes, any advice?!

Originally Posted by tgk79 View Post
Eeeek, please explain? Am so new to this!
https://www.taxadvisorypartnership.c...nge-rate-gain/

This is a good explanation.
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Old Apr 9th 2018, 7:33 pm
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Default Re: Selling UK property - Taxes, any advice?!

Originally Posted by FatFrank View Post
BTW, Based on the exchange rate difference between a UK property purchased in, for example, 2007 (1.9ish echange rate IIRC?) and sold in 2018 (1.40), I would think it a great time to minimize any US tax CGT from a UK property sale.

....but please get some proper advice from a qualified tax adviser i.e. not me!
I'm looking at selling a house I was gifted by my mum in 2009 - the exchange rate is in my favor, 1.61 Avg in 2007 and now Avg 1.4.

This means if my house was worth 200k GBP in 2009 and I sold it today for 250k GBP I would actually be in negative CGT.

Does that sound about right?
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Old Apr 9th 2018, 7:57 pm
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Default Re: Selling UK property - Taxes, any advice?!

Originally Posted by onedah View Post
I'm looking at selling a house I was gifted by my mum in 2009 - the exchange rate is in my favor, 1.61 Avg in 2007 and now Avg 1.4.

This means if my house was worth 200k GBP in 2009 and I sold it today for 250k GBP I would actually be in negative CGT.

Does that sound about right?
Only for UK purposes. For US purposes your basis your mum's basis ... ie whatever she paid for the property.
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Old Apr 10th 2018, 1:25 am
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Default Re: Selling UK property - Taxes, any advice?!

Originally Posted by Cook_County View Post
Only for UK purposes. For US purposes your basis your mum's basis ... ie whatever she paid for the property.
Wow - She bought the house in 1985 years back for 20kGBP and exchange rate then was similar to today.

This would mean I would be pay CGT on 230kGBP or $324k @ a CGT rate of ~15%.

Why would the price not be reflective of the date the house was gifted?
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Old Apr 10th 2018, 1:30 am
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Default Re: Selling UK property - Taxes, any advice?!

Because its capital value has increased, and you are taxed on your profit in that growth, as you would be on stocks/shares on sale.
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Old Apr 10th 2018, 1:37 am
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Default Re: Selling UK property - Taxes, any advice?!

Originally Posted by onedah View Post
Wow - She bought the house in 1985 years back for 20kGBP and exchange rate then was similar to today.

This would mean I would be pay CGT on 230kGBP or $324k @ a CGT rate of ~15%.
Plus possibly state income tax if you live in a state that has such a tax.

Originally Posted by onedah View Post
Why would the price not be reflective of the date the house was gifted?
Because the US tax code doesn't step up basis on gifts. It does for inherited property.
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Old Apr 10th 2018, 2:01 am
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Default Re: Selling UK property - Taxes, any advice?!

CGT of 15% - I wish
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Old Apr 10th 2018, 7:55 am
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Default Re: Selling UK property - Taxes, any advice?!

The good news (and presumably the reason for the gift) is that US tax on capital gains is probably still a little lower than UK inheritance tax if your mum had died while owning the property. If this was not the reason, making the gift to you as a US resident makes little sense in terms of global tax planning.
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