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UK property - moving to the USA (dual National)

UK property - moving to the USA (dual National)

Old Feb 27th 2019, 7:05 pm
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Question UK property - moving to the USA (dual National)

Hello - I dont know if anyone can help / recommend
I am a [UK] dual national and my wife is US national and we are looking to move back to USA next year. I have a property in my name (owned for 20 years) worth £400k and an £80k mortgage. As I understand it I can keep my house and transfer to Buy to Let when we move and generate rental income. I believe that as long as I do not return within 5 years after this point if we come back and the house once again becomes my primary residence I dont pay UK Capital Gains Tax. Thanks Rob
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Old Feb 27th 2019, 7:44 pm
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Default Re: UK property - moving to the USA (dual National)

Sounds like a Moving Back question?

Personally I'd sell it to streamline my US taxes, and invest the dosh here, but that's me.
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Old Feb 28th 2019, 1:17 pm
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Default Re: UK property - moving to the USA (dual National)

Originally Posted by Robgdunn View Post
Hello - I dont know if anyone can help / recommend
I am a [UK] dual national and my wife is US national and we are looking to move back to USA next year. I have a property in my name (owned for 20 years) worth £400k and an £80k mortgage. As I understand it I can keep my house and transfer to Buy to Let when we move and generate rental income. I believe that as long as I do not return within 5 years after this point if we come back and the house once again becomes my primary residence I dont pay UK Capital Gains Tax. Thanks Rob
UK CGT tax is assessed on the period of ownership (straight line from date of purchase to date of sale) on the periods for which you didn't live it or was exempt for some other reason, so you will likely pay UK CGT on the gain apportioned for the period that you rented it out. So if you paid £100,000 for it, lived in it for 20 years, moved to the US for 8 years, then returned to the UK and lived in for 12 years before selling it for £500,000, then you would be liable for 8/40 x £400,000. There would be a deduction for indexation relief for inflation, and there might be allowances for other periods, but I suspect that they're gonna "get you" for most if not all of the period that you rented it out. Note, because of the straight line apportionment process, that even if all of the £400,000 gain was attributable to the 20 years 1999-2019, i.e. it is worth £500,000 today, and it doesn't gain a penny in value hereafter, you will still pay CGT on 8/40 of the gain in respect of the period it was rented out between 2019 and 2027 when you sell it in 2039.

Also, remember that if you decide not to return to the UK and sell the house more than 36 months after moving out and leaving for the US then you will be utterly shafted by the IRS - you will not get any relief for any period that you lived in it, and will be taxed on the period since you owned it, and there is no indexation relief for inflation!!! In short, you should seriously consider selling it as soon as possible after you move to the US - we listed our home shortly before we left, and despite several unfortunate hiccoughs, it was sold 8 months after we left, so without CGT liability in the either country.

Last edited by Pulaski; Feb 28th 2019 at 1:24 pm.
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Old Feb 28th 2019, 5:51 pm
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Default Re: UK property - moving to the USA (dual National)

Rob is your wife a US Citizen or a US National? There is a difference in privileges.
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Old Feb 28th 2019, 5:53 pm
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Default Re: UK property - moving to the USA (dual National)

Originally Posted by Rete View Post
Rob is your wife a US Citizen or a US National? There is a difference in privileges.
"US Nationals" are like hens teeth - the term only applies to a small subset of the people who were born in American Samoa, so I think we can safely assume he meant "US Citizen".
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Old Feb 28th 2019, 5:55 pm
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Default Re: UK property - moving to the USA (dual National)

That's a good question. Distinctions are important.

But even so does it impact property/taxation issues?
Just want to add to my knowledge base.
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Old Feb 28th 2019, 6:14 pm
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Default Re: UK property - moving to the USA (dual National)

Hello Pulaski - Thanks for your reply it was the answer I was dreading (not from you :-) but expecting (ie I could stomach the UK/HMRC impact but if still a US citizen at the point of sale then I will be royally stiffed when the house eventually is sold)
Hi Rete - Thanks for your reply/question: My wife is a US citizen with temporary leave to remain in UK until the end of the year.
One other thought / question - "after the 36 month period" USA and I was taxed by IRS (without indexation) - I have owned the property for 20 years and maintained a mortgage of £60-£80k through out so roughly on a £400k value what would the IRS take from me if I sold at or from this point - My initial idea was to rent the property as an income/long term investment/pension but looking like this will not be possible.
So anyone have a plan B? - which at the moment sound like sell up for moving..
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Old Feb 28th 2019, 6:22 pm
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Default Re: UK property - moving to the USA (dual National)

For me selling up before leaving would be Plan A.
Not sure how long your wife has had ILR.

Can she be close to UK citizenship?
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Old Feb 28th 2019, 6:30 pm
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Default Re: UK property - moving to the USA (dual National)

Originally Posted by Pulaski View Post
"US Nationals" are like hens teeth - the term only applies to a small subset of the people who were born in American Samoa, so I think we can safely assume he meant "US Citizen".
Hens' teeth or not, there is still a distinction and whereas I 99% sure what he means, his wife just might be a national and not a US Citizen. I know the term National is used by Brits to denote citizenship. Not so with Americans.
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Old Feb 28th 2019, 6:35 pm
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Default Re: UK property - moving to the USA (dual National)

Hello Hotscot - no my wife is on her 2nd temporary leave to remain - the decision to move back is in part is due to the fact that from next year it will be indefinite leave to remain/uk citizen territory/domicile by default.This will make her liable in a couple of years for UK inheritance tax which will also leave us stiffed - this time by HMRC. Re previous comments I accept we have to like ly move but with a 4 year old / nice house nice town / nice schools - I want the fall back option if we chose/had to come back to UK of minimal impact on my son. Is another option to sell and buy another (smaller property) from which the CGT/IRS charge clock would be reset to day 01 and not 20 years?
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Old Feb 28th 2019, 6:55 pm
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Default Re: UK property - moving to the USA (dual National)

Originally Posted by Rete View Post
Hens' teeth or not, there is still a distinction and whereas I 99% sure what he means, ....
Using "resident population" figures as a proxy for the numbers of US Nationals in/from American Samoa and the aggregate number of US citizens (yes, I know that not everyone in the US is a citizen, but there are also many US citizens living outside the US too), you can be 99.983% sure.
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Old Feb 28th 2019, 7:00 pm
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Default Re: UK property - moving to the USA (dual National)

Originally Posted by Robgdunn View Post
Is another option to sell and buy another (smaller property) from which the CGT/IRS charge clock would be reset to day 01 and not 20 years?

I'm at the limit of my knowledge.
You're a US citizen?
You might not escape the IRS in this regard. Or HMRC. Swings and roundabouts.
(Apart from minimizing by selling up.)

Last edited by Hotscot; Feb 28th 2019 at 7:06 pm.
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Old Feb 28th 2019, 7:08 pm
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Default Re: UK property - moving to the USA (dual National)

Originally Posted by Hotscot View Post
…. You might not escape the IRS in this regard. Swings and roundabouts.
He's a British citizen, so as long as his wife isn't implicated in ownership, he won't pay CGT on the sale so long as it is prior to becoming a permanent resident upon entry to the US on a CR-1 or IR-1 visa.

I am not sure of the advisability of immediately repurchasing a similar nearby property - that seem to be a value judgement, so everyone is going to have their own opinion. but yes, the accumulator for CGT would reset to zero. Also bear in mind the complications of renting out a home in the UK while tax resident in the US, as the rules for calculating taxable income are very different.
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Old Feb 28th 2019, 7:14 pm
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Default Re: UK property - moving to the USA (dual National)

Oh yes, I assumed it was joint property but it's in his name.
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Old Feb 28th 2019, 7:21 pm
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Default Re: UK property - moving to the USA (dual National)

Hello Pulaski - I became a US citizen in 2014 looks like CR-1/IR-1 would not be applicable/valid - So again looks like sell up or look at the "cost" to manage a buy to let/investment in the uk as a backstop to choosing/having to return - Anyone know what the calculation for this might be - working on a £250k property rented so assume I will have to declare approx £750 per month uk income and then evaluate what the IRS grab would be over a 5 to 10 year period for the actual property.
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