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Tax (us and uk) from property sale

Tax (us and uk) from property sale

Old Feb 19th 2009, 2:22 am
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Question Tax (us and uk) from property sale

I have seen a number of posts similar to this, but I just wanted to check as I've been out of the UK longer than most posters and my situation is somewhat complicated.
Anyway, I am trying to figure out my tax liabilities before I execute a sale on a property in London. Here goes:

Purchased flat in London for £100,000 in 1998.
Lived in it until 2001.
Moved abroad to Paris to study in 2002 & started renting out flat.
Moved to USA for work in 2003, still renting out flat.
2004 Refinanced mortgage to release cash to put deposit on US property. Mortgage of London flat now £120,000.
Purchased home in USA in 2004.
Got married in 2005 (to American).
Flat in London is still rented out and worth about £280,000.

So my questions are:
How much UK tax would I have to pay if I sold the flat? It was my principal residence for 3 years, then I had 3 years of renting before purchasing a home in the US with husband.
I have been outside of the UK for more than 5 years. Does this make any difference for tax purposes?
Any idea how much the US would also want from me?
Does it make a difference if I will be using the profit to pay down the mortgage of my US property?

Now in a slight twist of the tale, I am currently on International Assignment in China and have been since mid-2008. Is there any advantage of selling the UK flat while I'm in China before I head back to US this May? I still have to file US (and UK AND China taxes, jeez, that makes my head hurt) and I am a Green Card holder.

Advice appreciated!

Thanks
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Old Feb 19th 2009, 3:46 am
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Default Re: Tax (us and uk) from property sale

The article on this thread cover most of what you are after http://britishexpats.com/forum/showt...63#post7291463

Looks like you've got a 180K gain over 11 years. You can knock out the time you lived there as PPR plus the next three years.

The remaining gain might have lettings relief of 40K and you might be able to put an annual CGT allowanc against it as well. I suspect you will still end up with a 10K CGT bill.

Probably worth paying a couple of hundred quid and getting advice.

the above is UK tax only - you may have a US tax exposure if you are still filling US tax - as above - probably worth spending a few hundred bucks on advice.
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Old Feb 19th 2009, 4:47 am
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Default Re: Tax (us and uk) from property sale

Hmmm, I did see that original post (the one you posted a link to) and one comment on it was this:
If it isn't your primary residence will you not get stung for UK capital gains tax on the difference between the buying and selling price.
which seems to conflict with other messages.

And if I had GBP180,000 profit over 11 years, how do you calculate which profit was made when? I don't have any official valuations done at any time over this period. Is it straight line valuation? Most of the profit would have been made in the time I lived in it plus the following 3 years.

thx
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Old Feb 19th 2009, 5:02 am
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Default Re: Tax (us and uk) from property sale

Originally Posted by jackattack View Post
Hmmm, I did see that original post (the one you posted a link to) and one comment on it was this:
If it isn't your primary residence will you not get stung for UK capital gains tax on the difference between the buying and selling price.
which seems to conflict with other messages.

And if I had GBP180,000 profit over 11 years, how do you calculate which profit was made when? I don't have any official valuations done at any time over this period. Is it straight line valuation? Most of the profit would have been made in the time I lived in it plus the following 3 years.

thx
The person who posted that comment is wrong. (tough luck)

I guess it would be a straight line deal - that would be the benefit of finding an accountant - why not choose one from the BBC articles, Menzes was one if I remember correctly.
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Old Feb 21st 2009, 1:43 am
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Default Re: Tax (us and uk) from property sale

Originally Posted by jackattack View Post
I have seen a number of posts similar to this, but I just wanted to check as I've been out of the UK longer than most posters and my situation is somewhat complicated.
Anyway, I am trying to figure out my tax liabilities before I execute a sale on a property in London. Here goes:
Hi:

I'm not going to even address the UK tax issue. Have you used a US CPA in the past? After all, if you have, she will be familiar with your reporting of the UK rental income on your past US tax returns. And that is where the questions on interest payments also came in. You may want to ask her.

BTW, on the US capital gains tax, the amount of financing doesn't figure into the matter.

I do believe professional advice is in order here -- you may need to find someone familiar with BOTH US and UK tax laws.
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