Longy

Are you trying to confuse people?

I am fairly certain that applies to anybody who is resident for tax purposes, not just US citizens. I doubt there are many things that differ from residents to US citizens regarding tax.

The F2555 applies if you worked and lived abroad as far as I can tell.

YankeeDaz

Not trying to confuse people, honest! Believe me, if you're adamant an F2555 does not have to be filled then I will go with that.

My house sold 3 months after I was US permanent resident so that would come under the order of foreign earned income. But as I said there is an exclusion, but I'm pretty sure it still needs to be reported.

http://taxes.about.com/b/2006/05/26/...k-accounts.htm

Maybe someone could email the author and say which forms are to be used?

Darren

Awesome Welles

Hmmmm, I wonder where I stand then...
I just off-loaded a property in England that hasn't been my primary residence for 10 years.
I haven't made a bundle on it (around $80k) and I don't think I'm liable for US taxes on this gain. My worry is the HMR&C - anyone advise me on this?
Deal should be done by end of Feb, with the proceeds deposited into my UK Building Society a/c. I want as much of that dosh as I'm entitled to over here, so that I can make some improvements to my current home - if that makes any difference....

Longy

It was just the comment regarding it only applying to US Citizens.

So where did you put the sale on the F2555?

And as you say its not clear from that link how he says to report it. As far as I can see it would go on Schedule D as long term capital gains, but I am using Taxact and unless I put in that I gained over $250,000 it won't put it in there.

BigDavyG

Do you have to bring all the cash over at once, oh, and how will the irs know when you sold the house, or even that any house existed in the first place ??

Longy

I would imagine you are going to be taxed on that, and would expect both the UK and US would see it like that. You would probably have to put it on your tax return in the UK and also put it on your US tax return along with a foreign tax credit (I think) so that you don't get taxed twice.

I am sure someone who knows more about this will come along at some point though.

Longy

But if they are really that good at keeping track of money being deposited into the US then even breaking up the transfers they would eventually want to know where that money had come from. Especially if you are not reporting that you have money in foreign bank accounts.

Of course if you are transferring it over £1000 at a time you may be OK, but I imagine most people would be transferring the money over to buy a house or some other large purchase so this is not really an option.

rew1000

"Earned Income" is wages etc.
http://www.irs.gov/individuals/artic...176508,00.html

BigDavyG's point notwithstanding, if you are a US citizen, or are US resident for tax purposes, the IRS will want to tax you on worldwide income. I don't believe the US-UK tax treaty will alter this, as generally it says that it's the country of residence that gets to tax you. Foreign tax credit etc. allows you to offset "unrefundable" foreign tax - in general that shouldn't apply to UK tax, as if you're not resident/ordinarily resident in the UK, I don't believe you'd be liable for UK tax:

"Individuals who are resident or ordinarily resident in the UK are liable to CGT on gains from disposing of assets wherever situated. Individuals who are neither resident nor ordinarily resident are not normally liable to CGT unless they are temporary non-residents." http://www.us.parkerrandall.com/serv...s_and_reliefs/

YankeeDaz

You may be taxed on that as a capital gain, as it wasn't your primary residence and you were outside the number of qualifying years for an exclsuion.

Ray

I'm with you Davy ...

YankeeDaz

Don't the banks inform the IRS of monetary movements above a specific amount?

Ray

yup ..10K

Longy

I don't get the paranoia over the 10K, its mainly to catch money laundering, but if you make a series of transfers of amounts 5K plus, you could just easily be flagged as suspicious which would be worse then having the 10k report filed in the first place. If the bank believes you are trying to avoid having to report on 10K, that alone is enough reason for them to file it as suspicious.

But regardless of that, unless you have a large amount of money stashed away in the UK and you are not notifying the IRS I don't see any reason to worry about this.

Edit: Although there may be people not reporting to the IRS, I am talking about the OP. As long as they have lived in the house for 2 years of the last 5 they will be exempt. In that case they don't stand to lose anything in transferring this over in one go.

YankeeDaz

Agree. OP will not have to pay any tax on the house sale.

Everything I read says it must be reported, but which form do you tell the IRS that? F2555 as foreign earned income or just the F1040?


Darren

Awesome Welles

I called the HMRC advice line this morning. Because I've been resident outside of the UK for more than 5 tax years, there is no tax liability on the proceeds of this sale, regardless of the fact that it wasn't my primary residence. They were quite positive on this issue.
Additionally, as this gain is not earnings and is also a gain derived from outside the US (as defined by the IRS), it looks like mine could be an un-taxed gain from either side of the Atlantic.....
I find this too good to be true, frankly - so, what have I missed?