Should I sell my UK property while I'm still non-US tax resident?
#31
Re: Should I sell my UK property while I'm still non-US tax resident?
.... The only advice I can give you on the original question ....
.... 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: ....
Last edited by Pulaski; Apr 25th 2019 at 10:48 am.
#32
DE-UK-NZ-IE-US... the TYP
Joined: Mar 2010
Posts: 2,848
Re: Should I sell my UK property while I'm still non-US tax resident?
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".
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".
#33
Re: Should I sell my UK property while I'm still non-US tax resident?
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.
#34
Re: Should I sell my UK property while I'm still non-US tax resident?
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.
#35
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.
#36
Re: Should I sell my UK property while I'm still non-US tax resident?
CGT paid in the UK (if any) is a credit against CGT assessed in the US (if any).
#37
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.
#40
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
#41
Re: Should I sell my UK property while I'm still non-US tax resident?
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.
#42
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?
#43
Forum Regular
Joined: Jan 2016
Location: Cambridge, MA
Posts: 237
Re: Should I sell my UK property while I'm still non-US tax resident?
#44
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
https://www.irs.gov/individuals/inte...ign-tax-credit
#45
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
https://www.irs.gov/individuals/inte...ign-tax-credit