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UK rental income into AJBell Sipp while living in USA?

UK rental income into AJBell Sipp while living in USA?

Old Feb 4th 2024, 7:47 am
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Default UK rental income into AJBell Sipp while living in USA?

I'm a dual USA / UK citizen with a flat in the UK that I rent out while living in the USA. I openned an AJ Bell SIPP account before leaving the UK but am currently not contributing to it. I'm thinking about saving my UK rental income and am unsure if I should invest it in AJ Bell's SIPP or if I should transfer to the rental income to the USA and put it into my Schwab 401 and/or general savings.
I would like to understand the gist of the tax rules and implications of saving UK rental income in a UK SIPP with AJ Bell while I'm also a US citizen and resident?
Has anyone done this before? How does the US treat the SIPP and rental income?
Any general advise or suggestions or things I have not considered?
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Old Feb 4th 2024, 3:08 pm
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Default Re: UK rental income into AJBell Sipp while living in USA?

I think the property has to be owned by the SIPP in order to pay rental income into it directly and indefinitely. Otherwise assuming you were a tax resident in the UK before you left, all you can do is contribute a maximum of £3,600 each year for 5 years after you leave the UK, and that would just be you investing cash of any kind which of course could come from your rental property. After that you can no longer contribute. Those are the general government rules, either way you will have to check if AJBell will allow any contributions at all from a US resident, there is a good chance they will not.

Your 401K will only allow contributions from earnings, but you can contribute up to $7,000 annually into an IRA or Roth IRA from any source.

Whatever you do, unless the property is owned by the SIPP you will have to report the income to the IRS and pay tax on it, which as a US citizen you would already be doing.
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Old Feb 4th 2024, 4:48 pm
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Default Re: UK rental income into AJBell Sipp while living in USA?

Originally Posted by Glasgow Girl
I think the property has to be owned by the SIPP in order to pay rental income into it directly and indefinitely. Otherwise assuming you were a tax resident in the UK before you left, all you can do is contribute a maximum of £3,600 each year for 5 years after you leave the UK, and that would just be you investing cash of any kind which of course could come from your rental property. After that you can no longer contribute. Those are the general government rules, either way you will have to check if AJBell will allow any contributions at all from a US resident, there is a good chance they will not.

Your 401K will only allow contributions from earnings, but you can contribute up to $7,000 annually into an IRA or Roth IRA from any source.

Whatever you do, unless the property is owned by the SIPP you will have to report the income to the IRS and pay tax on it, which as a US citizen you would already be doing.
Thanks for the info.
> Whatever you do, unless the property is owned by the SIPP you will have to report the income to the IRS and pay tax on it, which as a US citizen you would already be doing.

Sounds like there's no real benefit in doing this then and I should just save the rental income in regular US savings
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Old Feb 4th 2024, 6:03 pm
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Default Re: UK rental income into AJBell Sipp while living in USA?

There is a tax benefit to saving in an IRA or Roth IRA, but no way to protect your rental income from tax. However, there may not be a whole lot of tax to pay after you claim all expenses and depreciation. Watch out for Capital Gains Taxes though which can be avoided if the property was your principal residence for two out of the previous five years as of the date of sale. And also be aware of the tax payable on foreign currency gains associated with paying off a mortgage. This thread expands further on that. Selling UK House - Tax implications
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Old Feb 6th 2024, 10:20 am
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Default Re: UK rental income into AJBell Sipp while living in USA?

[QUOTE=Glasgow Girl;13238866]There is a tax benefit to saving in an IRA or Roth IRA, but no way to protect your rental income from tax. However, there may not be a whole lot of tax to pay after you claim all expenses and depreciation. Watch out for Capital Gains Taxes though which can be avoided if the property was your principal residence for two out of the previous five years as of the date of sale. And also be aware of the tax payable on foreign currency gains associated with paying off a mortgage. This thread expands further on that.
Thanks again for the info here, very helpful!
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