Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

US Capital Gains on Sale of UK Property

US Capital Gains on Sale of UK Property

Old Apr 8th 2011, 3:42 pm
  #1  
Just Joined
Thread Starter
 
Joined: Apr 2011
Posts: 4
annisca is an unknown quantity at this point
Default US Capital Gains on Sale of UK Property

I'm considering selling my UK property. I've been out of the UK for over 5 years so I won't pay CGT in the UK upon the sale of my flat, as far as I know. However, I've heard two different things about capital gains tax in the US. Do I pay it on the total gain since I bought it ('98), or will I owe taxes just on the gains my flat has been subject to since I moved to the USA (04')?

Thanks!
annisca is offline  
Old Apr 8th 2011, 5:22 pm
  #2  
.
 
Yorkieabroad's Avatar
 
Joined: Nov 2002
Location: Where bad things rarely happen in movies
Posts: 8,933
Yorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond repute
Default Re: US Capital Gains on Sale of UK Property

Originally Posted by annisca View Post
I'm considering selling my UK property. I've been out of the UK for over 5 years so I won't pay CGT in the UK upon the sale of my flat, as far as I know. However, I've heard two different things about capital gains tax in the US. Do I pay it on the total gain since I bought it ('98), or will I owe taxes just on the gains my flat has been subject to since I moved to the USA (04')?

Thanks!
Check out previous discussions on exemptions based on whether it was your primary residence, how long you'd lived in it in the last 5 years etc - I'm not up to speed on that as it hasn't affected my sales. However, if you're liable to US CGT you will pay basis the gain since you bought it, not since you moved here. This is one of the things that really, really bugs me, although I know I should just accept it and let it go!
Yorkieabroad is offline  
Old Apr 8th 2011, 5:55 pm
  #3  
Just Joined
Thread Starter
 
Joined: Apr 2011
Posts: 4
annisca is an unknown quantity at this point
Default Re: US Capital Gains on Sale of UK Property

Thanks! Yep, I won't benefit from any exemptions because I haven't lived in my UK flat for 2 of the last 5 years. So I'll be responsible for US CGT in full - I was v pleased when someone told me that it's charged as a % of the value of the gain since I moved here vs when I bought it, but this doesn't seem to be true. I'll have to take it on the chin, but that's extremely annoying and strikes me as wrong, actually. Thanks for your advice!
annisca is offline  
Old Apr 8th 2011, 7:16 pm
  #4  
Forum Regular
 
Joined: Mar 2009
Location: Florida
Posts: 76
chopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nice
Default Re: US Capital Gains on Sale of UK Property

Yep, to confirm, its your purchase price, not valuation on date moving to USA.
I bought my flat 10 years ago and its doubled in price. Why would I want to pay CGT to IRS on that?? I have a year to figure out what I should do.
Then I think you have to pay tax on any "gains" made by exchange rate differences.

I currently rent out my UK flat. I thought it was decent of IRS to allow a tax deduction (based on value of purchase price). Then i found out that when I sell it, I'll also have income tax on the total amount I have deducted on my tax... by my reckoning thats not a deduction, thats just a deferral of tax???

The price of that Green Card is hefty indeed.
chopper40 is offline  
Old Apr 8th 2011, 8:05 pm
  #5  
BE Forum Addict
 
Joined: Feb 2008
Posts: 3,259
BritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond repute
Default Re: US Capital Gains on Sale of UK Property

Originally Posted by annisca View Post
I'm considering selling my UK property. I've been out of the UK for over 5 years so I won't pay CGT in the UK upon the sale of my flat, as far as I know.
Wrong way around.

It's exactly because you haven't lived in it for years that you will be liable for CGT in the UK.
BritishGuy36 is offline  
Old Apr 8th 2011, 8:15 pm
  #6  
.
 
Yorkieabroad's Avatar
 
Joined: Nov 2002
Location: Where bad things rarely happen in movies
Posts: 8,933
Yorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond reputeYorkieabroad has a reputation beyond repute
Default Re: US Capital Gains on Sale of UK Property

There was a thread on this recently - I have been out of the UK for 16 years, but had a brief 6 month stint back there in 2005 which reset the clock. I'm now 5 complete tax years out so I asked my UK tax guy to confirm with HMRC that I was not liable to CGT. Despite the problems they are having at the moment the advisor has had written confirmation from them that I wont be liable for UK CGT on any future sales due to the length of time overseas. I am making sure that letter does not disappear in case someone down the line decides thats not the case......
Yorkieabroad is offline  
Old Apr 8th 2011, 8:37 pm
  #7  
Lost in BE Cyberspace
 
Joined: Jan 2006
Location: San Francisco
Posts: 9,484
Giantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond repute
Default Re: US Capital Gains on Sale of UK Property

Originally Posted by chopper40 View Post
I currently rent out my UK flat. I thought it was decent of IRS to allow a tax deduction (based on value of purchase price). Then i found out that when I sell it, I'll also have income tax on the total amount I have deducted on my tax... by my reckoning thats not a deduction, thats just a deferral of tax???
If you claim for depreciation on your taxes and the property hasn't depreciated in value when you come to sell it, why wouldn't that depreciation be recaptured?
Giantaxe is offline  
Old Apr 8th 2011, 8:50 pm
  #8  
Forum Regular
 
Joined: Mar 2009
Location: Florida
Posts: 76
chopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nicechopper40 is just really nice
Default Re: US Capital Gains on Sale of UK Property

Originally Posted by Giantaxe View Post
If you claim for depreciation on your taxes and the property hasn't depreciated in value when you come to sell it, why wouldn't that depreciation be recaptured?
Giantaxe
What you say makes perfect sense. Why do they allow people to depreciate it in the first place? if it's possible, I wonder if its better not to take the depreciation??
chopper40 is offline  
Old Apr 8th 2011, 8:55 pm
  #9  
Lost in BE Cyberspace
 
Joined: Jan 2006
Location: San Francisco
Posts: 9,484
Giantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond reputeGiantaxe has a reputation beyond repute
Default Re: US Capital Gains on Sale of UK Property

Originally Posted by chopper40 View Post
Giantaxe
What you say makes perfect sense. Why do they allow people to depreciate it in the first place? if it's possible, I wonder if its better not to take the depreciation??
Property doesn't always go up in value!

I don't think you're forced to depreciate, but in the event of an eventual profit on sale, you are essentially getting the benefit of a deduction in today's dollars and paying it back in tomorrow's.
Giantaxe is offline  
Old Apr 8th 2011, 11:09 pm
  #10  
Just Joined
Thread Starter
 
Joined: Apr 2011
Posts: 4
annisca is an unknown quantity at this point
Default Re: US Capital Gains on Sale of UK Property

BritishGuy, the UK CGT thing I got from Deloitte when I was still an expat here (company paid for advice), so I'm pretty sure I'm correct on the fact that I won't have to pay CGT in the UK if I haven't lived there for more than 5 years. I certainly hope I am.........
annisca is offline  
Old Apr 9th 2011, 12:17 am
  #11  
BE Enthusiast
 
Joined: Jun 2005
Posts: 419
dfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond reputedfjordan has a reputation beyond repute
Default Re: US Capital Gains on Sale of UK Property

If you check out the HRMC webpage under " capital gains for non residents" you´ll see it says that if you left the UK after 17.3.98, and are not resident and not ordinarily resident and at least 5 full tax years have passed between leaving and the year of return, then you will not be liable to capital gains at all.
dfjordan is offline  
Old Apr 9th 2011, 1:23 am
  #12  
BE Forum Addict
 
Joined: Feb 2008
Posts: 3,259
BritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond reputeBritishGuy36 has a reputation beyond repute
Default Re: US Capital Gains on Sale of UK Property

Huh, fair enough then.

But all the discussion when I was moving here a couple of years ago was that if a property was not your primary residence for three of the last five years, you were liable for CGT.
BritishGuy36 is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us Archive Advertising Cookie Policy Privacy Statement Terms of Service

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.