US Tax question, sold UK property
 

Re: US Tax question, sold UK property
 

Not a tax pro.

You received your profits in 2019?
And you will be tax residents for 2019?
You lived in the house less than two years?
I think these are the relevant points..

If the answer is yes to all of these, I think you are required to declare the profit after costs as Capital Gains.
You may have to pay tax on the (profits - [UK taxes/selling costs])
So that will be the Standard Federal Capital Gains tax plus the Arizona Capital Gains tax. You can look them up.

You can check out this link.
https://www.ft.com/content/54bedb30-...1-00144feab7de

(Looks like the $250,000/$500,000 exclusion, (non-taxable profit), won't apply since you lived in it less than 2 years.)
(Suggest TurboTax or similar. It's scary at first but then becomes familiar.)
(If you can afford to max a 401k and/or IRA you'll save a chunk of tax and get a leg up on a retirement plan. You might still be able to contribute to an IRA for tax year 2018 and then for tax year 2019, same with 401k if your plan allows. Before April 15th this year.)

Good luck in Phoenix, hope you like roasting.

Re: US Tax question, sold UK property
 

Re: US Tax question, sold UK property
 

'It’s been pretty much 2 years'

Yes but it sounds that you lived there from January 2017 until October 2018 and then your primary residence was in Phoenix??
Not two years then...I don't really think you can use 'pretty much' in your tax filings.
Not giving you a hard time but in these sort of things accuracy is paramount.

And you received your profit in 2019? If so I believe my first response still stands.

From the time you bought the house/closed to the time you sold/closed may be two years, and that may be considered a Long Term Capital Gain and reduced tax rate.

Re: US Tax question, sold UK property
 

Re: US Tax question, sold UK property
 

That's what I thought...you may be tempted to claim it as your primary residence for two years, but don't go there.
If you were tempted, and I know you've not said anything, it could negatively affect your future status for the rest of your life.
Even if you became a citizen.
Check out what I said about 401k's and IRA's. You can reduce your taxes significantly and set yourself off on a financially secure future.

(My opinion.)

Re: US Tax question, sold UK property
 

Re: US Tax question, sold UK property
 

Taxes can be really simple over here unless you have investments etc, particularly investments outside the US.
Part of the issue with complexity is that there are so many potential deductions to actually reduce your taxes.
Once you learn to take advantage of them they become very beneficial.
(For example, because I have a business, each time I go to the post office it reduces my taxes.)

Regarding purchasing a property, what will be more important is your debt-to-income ratio and your credit rating, which will be non-existent.
Personally I'd do the rent thing for a while to settle in, build your credit, (They won't care what your credit rating was in the UK, doesn't exist for them), maybe look to buy at the end of the year when sales are slow and you'll get a better deal.
Besides you need to put 20% down if you want to avoid paying mortgage insurance.

In addition, you'd be better making sure you're employment is relatively secure before buying a house.
What Does “At-Will” Employment Mean? | Jaburg Wilk

I came here 20 years ago with a major corporation. Thought that I'd had it made and was invincible.
After a year and a half the economy turned down and I was left a voicemail saying my position had been eliminated and don't come in to the office. Thanks for your service, go back home.

Run my own business now which, ironically, prevents me from moving home to the UK.:lol:

Re: US Tax question, sold UK property
 

Re: US Tax question, sold UK property
 

Good man!

Re: US Tax question, sold UK property
 

You almost certainly have a substantial US taxable foreign currency gain for 2019 on repaying the mortgage. As you have engaged Deloitte to act for you; I'd discuss this with a CPA or EA at Deloitte.

Re: US Tax question, sold UK property
 

Is this true in the case, OP purchased on Jan 2017, when the exchange rate was slightly lower that it is was in Jan 2019 - The repayment of the mortgage in 2019 in USD was higher than it was in 2017, meaning a foreign currency loss?

For the OP, this article explains the impact of exchange rates on the repayment of a foreign mortgage, this one which illustrates a foreign currency loss.