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US Capital Gains tax on property sold in the UK

US Capital Gains tax on property sold in the UK

Old Jan 13th 2018, 7:01 pm
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Default US Capital Gains tax on property sold in the UK

I am a resident and British national who recently (6yrs ago) became a dual national with the US through my American father. I haven't lived or worked in the States yet and don't yet have a social security number.

I have been offered a job in NY but am receiving very conflicting advice about taxation. I have not filed taxes in the States but am aware that this can be done easily and my income at least should not be subject to double taxation. However I sold a property recently in the UK, my primary residence, which qualified for exemption on Capital Gains tax in the UK. I am being told that this however could be taxed in the US. Is this true? I have been given a great deal of conflicting advice in the UK.
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Old Jan 13th 2018, 10:48 pm
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Default Re: US Capital Gains tax on property sold in the UK

As a US citizen you're subject to taxes on your world wide income regardless of where you reside. As such you're required to file a tax return.

I suggest consulting a UK/US accountant for advice. This is what bit Borris Johnson.

Also don't use US national if you're a citizen. There is a distinct and important difference.

Last edited by tom169; Jan 14th 2018 at 12:12 am.
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Old Jan 13th 2018, 11:43 pm
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Default Re: US Capital Gains tax on property sold in the UK

Terribly sorry to use the wrong word. Dual citizen.

I have already contacted an accountant but they have been incredibly vague about the laws- instead they require a huge fee to investigate. I was reaching out to this forum in the hope that someone else had gone through this and could therefore shed some light on the situation in terms of the capital gains tax on the property.
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Old Jan 14th 2018, 7:35 am
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Default Re: US Capital Gains tax on property sold in the UK

You have asked the wrong accountant. This is a standard topic for American tax specialists located in the UK. The big problem since the collapse of Sterling in June 2016 is typically the foreign currency gain on repayment of any Sterling mortgage, rather than solely any tax on the gain on sale.
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Old Jan 14th 2018, 2:39 pm
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Default Re: US Capital Gains tax on property sold in the UK

If you are a US Citizen then as stated above, you are liable to pay US tax if there is any to be paid no matter where you are in the world. I think this is a simple case though, you stated it is your primary residence and that qualified for taxation relief in the UK which, knowing what I do about the UK CGT rules, if you qualified for this in the UK you will probably qualify for the US equivalent relief which is $250k if filling single or $500k if filing married.

The question is, did you make a gain on the property of more than $250/$500k if married? If so, you will most likely be required to pay some taxes unless you can offset the gain with other business losses (if you are PAYE and have no business, this probably doesn't apply to you)

I would be less concerned about foreign currency gain on the mortgage repayment as you could argue that your principal currency is GBP, not USD, therefore you made no gains on the mortgage interest as long as you sold before you come to the US, which you state you did.
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Old Jan 14th 2018, 8:12 pm
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Default Re: US Capital Gains tax on property sold in the UK

Originally Posted by JimmyArtnull View Post
If you are a US Citizen then as stated above, you are liable to pay US tax if there is any to be paid no matter where you are in the world. I think this is a simple case though, you stated it is your primary residence and that qualified for taxation relief in the UK which, knowing what I do about the UK CGT rules, if you qualified for this in the UK you will probably qualify for the US equivalent relief which is $250k if filling single or $500k if filing married.

The question is, did you make a gain on the property of more than $250/$500k if married? If so, you will most likely be required to pay some taxes unless you can offset the gain with other business losses (if you are PAYE and have no business, this probably doesn't apply to you)

I would be less concerned about foreign currency gain on the mortgage repayment as you could argue that your principal currency is GBP, not USD, therefore you made no gains on the mortgage interest as long as you sold before you come to the US, which you state you did.

The currency gain can be cured in several possible ways. This is something to discuss with whichever professional you select to work with.
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