Pulaski

Oh, you're already on the hook then, but can use the $250,000/$500,000 CGT relief (depending on whether you file taxes separately or jointly respectively) if you sell within 36 months of moving out.

Robgdunn

Ahh hook line and sinker for me then - Re the 500k 3 years - does this stand in full for 36 months or pro rata the longer it takes to sell. If 100% for 3 years then I have a small window to see how i cope with the move. Also will any of this be affected if we (in my wifes name buy a house in the USA or maybe best to rent there for a couple of years?

Pulaski

Nope, it's all or nothing - the full $500k (married filing jointly) for any sale prior to the end of the 36th month, and nothing for a sale in the 37th month or thereafter,

Mostly houses purchase in the US are assumed to be joint, though that depends on state law. In most states it would be difficult, if not impossible, for to buy in her name alone. I suspect that a lawyer could cook up some sort of trust arrangement to give her sole ownership rights, but that would have extra costs associated with the transaction.

Robgdunn

Thanks for the feedback again - has given me some comfort/wriggle room on at least being able to move/settle and then commit to selling (or if we have to move back not lose the chance to stay in the same house. Just hope buying in the USA (as you point out probably jointly) doesn'
t affect the option but if it does we can rent for 1-2 years

Pulaski

No, buying a home in the US won't impact anything - but in the US/ per IRS rules, you only have use of the tax relief on gains on your home once every two tax years. In other words, you can own two homes simultaneously, but would need to space out the sales if both had substantial gains during your time of ownership if you wanted to get relief.

Robgdunn

Great news can move and buy in the USA and have time to settle then sell uk property with small cgt to hmrc. Many thanks for this advice..

Pulaski

You're welcome.

Robgdunn

Hello Pulaski - re your update which has helped me understand better options that I have, I have now been able to look in more detail into the principal private residence ('PPR') relief (UK/HMRC) and the window of opportunity for disposal has now been reduced to 18 months (and proposed for 9 months -April 20)
https://www.taxcafe.co.uk/resources/...leavinguk.html
https://www.ft.com/content/00615fc8-...6-2022a0b02a6c
This still gives me some breathing space to make a decision and even 9 months is better that nothing (hope it stays at 18)
Thought it be worthwhile sharing this with you and anyone else that may be a similar situation to me - not the easiest query to resolve.
Thanks again
Rob

Pulaski

Correct, that's 18 months for UK CGT, ... it's 36 months for US CGT. But the rules for calculating CGT are dramatically different - for starters, the UK apportions the gain into chargeable and non-chargeable periods, so if you owned the house for 18 years, then moved out and sold it two years later, you would only pay tax on 1/40 of the gain (six months out of 20 years). The US IRS operates an "all or nothing" approach, and even the "nothing" is capped.

So given how little CGT the UK would take, you should probably just work to the US IRS 36 month deadline, as that one will hurt if you miss it.

Of course there is a way to avoid CGT entirely in both the US and UK .... hold it until you die, and your heirs receive it at market value, with no CGT to pay.

For completness I should also note that the US allows a firm of roll-over relief, called a 1031 Exchange, which allows you to roll a taxable capital gain into a new "similar" asset. So you could, if you jump through the right hoops, use the proceeds of the sale in the UK to buy rental property in the US and thereby postpone indefinitely the time when the tax becomes payable.

Robgdunn

Thanks - 18-36 months and option for rolling into a "similar" asset or die to avoid CGT - what a choice :-)
Rob

sadiigo

[QUOTE=Pulaski;12645754]Nope, it's all or nothing - the full $500k (married filing jointly) for any sale prior to the end of the 36th month, and nothing for a sale in the 37th month or thereafter,

There is an exception to this rule and the $250k/$500k exemption can still be used partly (ie pro-rated) if you sell the house as a result of the job relocation. I was able to use it when I sold my UK house 39 months after we moved here. I am not sure if the OP can claim it though.