Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

Should I sell my UK property while I'm still non-US tax resident?

Should I sell my UK property while I'm still non-US tax resident?

Old Apr 25th 2019, 10:12 am
  #31  
 
Pulaski's Avatar
 
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,397
Pulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by tht
… ok I still don’t really understand if your are saying the substantial presence test does not apply to you based on your current visa type or if you mean you have not been here enough days for you to meet it. …
He hasn't said, and there is no reason why he should, as he is comfortable that he knows his own taxation status and didn't ask for advice on it, but, that said, for example if you're in the US on a J-1 visa then you are specifically non-resident for US tax purposes and although you are subject to US taxes on your US earnings, your earnings and gains outside the US are not subject to US taxation. Eventually, after the end of the J-1 visa period you, if you transition to another visa, then you will become subject to US taxation on your worldwide income and chargeable gains.
.... The only advice I can give you on the original question ....
Assuming he doesn't sell before he becomes subject to US taxation.
.... is to make sure you understand how the gain is calculated, i.e. that’s ist not just sale price - purchase price in a rental you need to include the depreciation etc, I would do some reading on adjusted basis, because the gain is likely higher than you think for IRS purposes: ....
If he isn't subject to US taxes then there isn't any depreciation to "reclaim".

Last edited by Pulaski; Apr 25th 2019 at 10:48 am.
Pulaski is offline  
Old Apr 25th 2019, 11:32 am
  #32  
tht
DE-UK-NZ-IE-US... the TYP
 
Joined: Mar 2010
Posts: 2,848
tht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by Pulaski
He hasn't said, and there is no reason why he should, as he is comfortable that he knows his own taxation status and didn't ask for advice on it, but, that said, for example if you're in the US on a J-1 visa then you are specifically non-resident for US tax purposes and although you are subject to US taxes on your US earnings, your earnings and gains outside the US are not subject to US taxation. Eventually, after the end of the J-1 visa period you, if you transition to another visa, then you will become subject to US taxation on your worldwide income and chargeable gains.

Assuming he doesn't sell before he becomes subject to US taxation.

If he isn't subject to US taxes then there isn't any depreciation to "reclaim".
yes it sounded like OP is trying to run each scenario to compare what tax would be so they can decide what to do, so they need to understand how it works in each different scenario.
tht is offline  
Old Apr 25th 2019, 5:00 pm
  #33  
BE Forum Addict
 
Owen778's Avatar
 
Joined: Jan 2014
Location: Anchorage, AK, USA
Posts: 1,345
Owen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond reputeOwen778 has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by Pulaski
He hasn't said, and there is no reason why he should, as he is comfortable that he knows his own taxation status and didn't ask for advice on it, but, that said, for example if you're in the US on a J-1 visa then you are specifically non-resident for US tax purposes and although you are subject to US taxes on your US earnings, your earnings and gains outside the US are not subject to US taxation. Eventually, after the end of the J-1 visa period you, if you transition to another visa, then you will become subject to US taxation on your worldwide income and chargeable gains.
Questions here are sometimes unnecessarily intrusive, but I don't think asking about visas is in this context. There are a lot of posters here, even a few who've been here a very long time, who either don't understand the difference between US permanent residency and tax residency, or who don't understand the substantial residency test properly. And it's very unusual to have arrived in the US in 2017, but not count as a tax resident until 2020.
Owen778 is offline  
Old Apr 25th 2019, 5:20 pm
  #34  
 
Pulaski's Avatar
 
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,397
Pulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by Owen778
Questions here are sometimes unnecessarily intrusive, but I don't think asking about visas is in this context. There are a lot of posters here, even a few who've been here a very long time, who either don't understand the difference between US permanent residency and tax residency, or who don't understand the substantial residency test properly. And it's very unusual to have arrived in the US in 2017, but not count as a tax resident until 2020.
I know what you mean, so I partially agree, but see post #27 above.
Pulaski is offline  
Old Apr 26th 2019, 2:24 am
  #35  
Lost in BE Cyberspace
 
mrken30's Avatar
 
Joined: Jul 2008
Location: Portlandia Metro
Posts: 7,425
mrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

You may also be subject to UK CGT, s far as I know the tax treat only really covers earned income tax and not CGT. If that is the case you may be double taxed.
mrken30 is offline  
Old Apr 26th 2019, 2:28 am
  #36  
 
Pulaski's Avatar
 
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,397
Pulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by mrken30
You may also be subject to UK CGT, s far as I know the tax treat only really covers earned income tax and not CGT. If that is the case you may be double taxed.
CGT paid in the UK (if any) is a credit against CGT assessed in the US (if any).
Pulaski is offline  
Old Apr 26th 2019, 4:08 am
  #37  
Lost in BE Cyberspace
 
mrken30's Avatar
 
Joined: Jul 2008
Location: Portlandia Metro
Posts: 7,425
mrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

I was curious if the $10000 limit applied to foreign taxes as well as State taxes. Also places like Oregon do not give you credit for foreign taxes paid, so you may want to check at a State level.
mrken30 is offline  
Old Apr 26th 2019, 8:19 am
  #38  
BE Forum Addict
 
Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,098
durham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by Pulaski
CGT paid in the UK (if any) is a credit against CGT assessed in the US (if any).
+1
durham_lad is offline  
Old Apr 26th 2019, 3:15 pm
  #39  
BE Forum Addict
 
Joined: Jul 2015
Location: Watford
Posts: 1,147
dj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond reputedj6372 has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by Pulaski
FIFY
dj6372 is offline  
Old Apr 27th 2019, 2:45 am
  #40  
Lost in BE Cyberspace
 
mrken30's Avatar
 
Joined: Jul 2008
Location: Portlandia Metro
Posts: 7,425
mrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

That's unfair that you can offset foreign taxes against federal taxes but are limited to $10k of State taxes that can be offset
mrken30 is offline  
Old Apr 27th 2019, 3:34 pm
  #41  
 
Pulaski's Avatar
 
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,397
Pulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by mrken30
That's unfair that you can offset foreign taxes against federal taxes but are limited to $10k of State taxes that can be offset
Taxes are never "fair". ... If you knew anything about taxation you would be familiar with the expression "there is no equity in tax", meaning that you cannot sue for "unfairness", nor can you sue to argue over what the legislators "meant" when they passed the tax law with specific meaning. In both the UK and US the wording of tax legislation has to be interpreted literally when applying the law.

Thread was an interesting case a number of years ago in the UK, over whether VAT was chargeable on jaffa cakes. As far as I remember, HMR&C wanted to tax them because cakes were chargeable, but United Biscuits, makers of McVities jaffa cakes, said that they were biscuits and therefore exempt from VAT. The wording of the law could not be challenged, so the argument hinged on whether, in fact, jaffa cakes were cakes or biscuits. The ruling given was that biscuits were baked hard and dry, and if left out would spoil by going soft, whereas a cake was based soft and moist and spoils by going dry. IIRC is was decided that a jaffa cake started out moist and spoiled by going dry, and therefore was a cake. Update: apparently the VAT rules changed, and United Biscuits tried again, but by then VAT was chargeable on "luxury biscuits", and as jaffa cakes had a chocolate half-coating, they were still chargeable to VAT even if they were a biscuit.
​​​​

To your original point on the fairness of limiting the state tax deduction, I would make the counter-argument, that you paying excessive local tax to feather your own nest (superior services in your state) then being permitted to reduce your contribution to the federal coffers is also unfair. You benefit, presumably, from those superior services, and you are permitted to reduce your share of federal taxes, and everyone else has to pick up a share of your shortfall! The overall net effect of this is that taxpayers in states with more modest state government expenditure are paying additional federal taxes to subsidize profligate spending by your state!

Last edited by Pulaski; Apr 27th 2019 at 3:47 pm.
Pulaski is offline  
Old Apr 27th 2019, 4:09 pm
  #42  
Lost in BE Cyberspace
 
mrken30's Avatar
 
Joined: Jul 2008
Location: Portlandia Metro
Posts: 7,425
mrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Totally agree but why should the federal government feather the nests of foreign governments at the expense of US citizens more than it does with is own States?
mrken30 is offline  
Old Apr 27th 2019, 10:57 pm
  #43  
Forum Regular
 
Joined: Jan 2016
Location: Cambridge, MA
Posts: 237
Mercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond reputeMercury39 has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by Pulaski
Update: apparently the VAT rules changed, and United Biscuits tried again, but by then VAT was chargeable on "luxury biscuits", and as jaffa cakes had a chocolate half-coating, they were still chargeable to VAT even if they were a biscuit.:
Makes sense to me, I consider them a luxury that I only treat myself to once or twice a year.
Mercury39 is offline  
Old Apr 28th 2019, 2:28 pm
  #44  
Lost in BE Cyberspace
 
mrken30's Avatar
 
Joined: Jul 2008
Location: Portlandia Metro
Posts: 7,425
mrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond reputemrken30 has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Foreign tax credits appear only to apply to income tax

https://www.irs.gov/individuals/inte...ign-tax-credit
mrken30 is offline  
Old Apr 28th 2019, 2:50 pm
  #45  
 
Pulaski's Avatar
 
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,397
Pulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond repute
Default Re: Should I sell my UK property while I'm still non-US tax resident?

Originally Posted by mrken30
Foreign tax credits appear only to apply to income tax

https://www.irs.gov/individuals/inte...ign-tax-credit
Having read your link, I have two points: (i) the IRS taxes capital gains as a form of "income", and (ii) CGT is not listed on the page you linked as being a type of tax excluded from having a tax credit available.
Pulaski is offline  

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.