stephend-

Having just sold my UK property after living in the US for more than 10 years, I see I have to pay tax on it based on any gain I have made since 5 April 2015 using the value of the property on that date. Well that's a bugger because I didn't get it valued in 2015. Only in 1997 when I bought it, and this year when I put it on the market.

My solicitors told me what similar properties were selling for in my street in April 2015, so I thought I would use an average for that, but there is quite a wide range.

Then I discover that HMRC have a free "service" where they will value it for you, and you can haggle if you think they have got it wrong. You have to complete form CG34 AFTER you have disposed of it, but at least THREE MONTHS before your return is due. That's all good and well, but if you are a non-resident you have 30 days to pay your tax, so meeting this requirement is not possible. This is something they KNOW but in no way help to resolve based on what I saw on their website (scroll down to the "Valuations" section: https://www.gov.uk/guidance/capital-...-loss-manually.

I think the best I can do is estimate the value, pay the tax, and then fill in the form and see if their number is different in 3 months time, and if it is (and I don't challenge it) then pay it when I complete my Self Assessment return for 2020/2021.

Anyone been through this?

Pulaski

Maybe zillow or something similar could help, as they track a value, rough though it may be, for each property over time.

You're aware that US CGT will be based on your historic cost, even though that may be years before you became liable for US taxes, right? And that you will probably have a substantial taxable gain on the mortgage repayment, assuming you still had a mortgage, because you repaid the loan with devalued, post Brexit referendum, pounds, compared to the higher value pounds you borrowed?

stephend-

Thanks that a good idea - I'll see how that compares to my solicitor's numbers.

I am hoping to avoid US CGT (or at least be on the lowest rung), as I started my own business last year, and what with all my set-up costs and so on, I expect my income for this tax year to be very low indeed. My remaining mortgage was, thankfully, miniscule... I am assuming I don't need to report the sale until I am doing my 2020 Tax Return for the IRS... right?

Cheers,

Stephen.

Pulaski

I am not certain about the reporting, but I don't think you need to report it ahead of your annual tax return.

I thought that the rate of CGT in the US was flat no matter what, after any allowances (such as principal residence, which won't apply to you as you moved out ten years ago) and deductions (capital expenditure) ... at 20%

stephend-

For long term capital gains it is taxed in the US as follows (% vs. your income) :

0% $0 to $40,000
15% $40,001 to $441,450
20% $441,451 or more

I'm hoping to be poor this year!

tht

the brackets may have increased slightly from what you quote.

Also make sure you understand the difference between the purchase price and the adjusted basis.

https://www.irs.gov/taxtopics/tc409

alos note that while you won’t have it file till next year, you may have to make an estimated payment of something is owed.

stephend-

Thanks tht - I'll be sure to do my homework. The brackets I mentioned are the new ones for 2020, so should be right.

Cheers,

Stephen.

tom169

Where does 2015 come from? What am I missing?

vespucci

"Having just sold my UK property after living in the US for more than 10 years, I see I have to pay tax on it based on any gain I have made since 5 April 2015 using the value of the property on that date. Well that's a bugger because I didn't get it valued in 2015. Only in 1997 when I bought it, and this year when I put it on the market."

Non-residents liable to tax on property sales after that date.

"Having just sold my UK property after living in the US for more than 10 years, I see I have to pay tax on it based on any gain I have made since 5 April 2015 using the value of the property on that date. Well that's a bugger because I didn't get it valued in 2015. Only in 1997 when I bought it, and this year when I put it on the market."

As I understand it, only if you don't want to do it linearly (x time after/whole time).

Pulaski

The use of value at a fixed historic time point is an oddity as it used to be that, for UK CGT purposes, the gain was always calculated on the basis of a constant rate of capital appreciation, no matter how the market price had actually varied over time.

A common example would be if you bought a house and lived in it for a while, rented it out for a while (while living in the UK), lived in it again, left it vacant while you were sent overseas by your employer, etc, and so there were various periods when the gain was taxable and periods when it was not, and CGT was calculated as (the number of months (or days) that it was assessable for CGT/ total period of ownership) x (the total gain). The total gain would be after allowances, such as capital improvements.

newadventure

The 2015 date was fairly widely advertised at the time. I am not always on top of things administratively, but we did ask our rental agents to do a valuation of the property in 2015 in case we sold it at a later date