# Any US Tax implications for (finally) selling my house in the UK



## cjh (Mar 14, 2011)

Anyone know the answer to this....?

In the 1980's I bought a house in the UK. I moved to the US in 1991 and married a US Citizen, became a US citizen myself in 2005.

I just sold my house in the UK and the solicitor is sending the monies over to my US bank account. Do I have to pay any TAX on this (US or UK)?

If so, what type of tax specifically?


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## Bevdeforges (Nov 16, 2007)

Yup - for US taxes, you have to report the sale as a capital gain. Basically, you will pay taxes on the difference between the selling price and your basis in the property (i.e. what you paid for it plus any capital improvements you made while you owned it). 

I expect there may be taxes to pay in the UK (since the property wasn't your personal residence), and if that is the case you can claim the foreign tax credit against your US tax liability.
Cheers,
Bev


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## jonridings (Feb 4, 2013)

*Selling house in UK*



cjh said:


> Anyone know the answer to this....?
> 
> In the 1980's I bought a house in the UK. I moved to the US in 1991 and married a US Citizen, became a US citizen myself in 2005.
> 
> ...


I am in exactly the same situation, but have not yet sold the house in the UK. Could you tell me how this worked out for you tax wise - both UK and US Tax responsibility.
Thank you
Jon


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## Davis1 (Feb 20, 2009)

US - UK Tax Preparation and Advice | BritishExpatsTax.Com


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## jonridings (Feb 4, 2013)

Thx for the web address - have you used this tax advisor and can you recommend him ?


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## jnelson (Feb 4, 2013)

Anyone know if there is a tax treaty for CGT between UK/US.

Or if you can influence if the purchase value in the US to reflect the value when you came to the US not when you purchased the property. 

I am really irked that I need to pay 20% CGT on our UK home - when we bought it we did not intend it to become an 'investment property'. That only occurred when we came to the US and bought another property.


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## Bevdeforges (Nov 16, 2007)

Do you not have to pay any capital gains tax on the property in the UK on sale? 

Basically, the way the tax treaty thing works on the US side is that you get to offset any taxes paid abroad against whatever bill you run up on the US side. Depending on how long you've owned the house - and when you converted it to a rental property - you might be able to slip in under the "sale of personal residence" provisions. See here: http://www.irs.gov/Help-&-Resources...-etc.)/Property-(Basis,-Sale-of-Home,-etc.)-5

Cheers,
Bev


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## jnelson (Feb 4, 2013)

thanks Bev - we are at nearly 7 years out here. Bought at the high of the market in the US and now under water. Now have to pay CGT for the UK property in the US feels like a double wammy. I guess that just how it roles..


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## Davis1 (Feb 20, 2009)

jonridings said:


> Thx for the web address - have you used this tax advisor and can you recommend him ?


He is highly regarded on other forums

I am too poor to need an advisor


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## Bevdeforges (Nov 16, 2007)

jnelson said:


> thanks Bev - we are at nearly 7 years out here. Bought at the high of the market in the US and now under water. Now have to pay CGT for the UK property in the US feels like a double wammy. I guess that just how it roles..


One further caveat on all this. If you have been renting out your UK property, you MUST adjust the basis of the property for depreciation during the time you were renting out the property. If you didn't take the depreciation as a deduction from the income the property was generating, then file amended forms for whatever years you can in order to get some of that back.
Cheers,
Bev


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## jnelson (Feb 4, 2013)

Ok heard some more from US Accountant and some additional taxes you may need to pay.

We need to pay 20% and an additional 3.8% for Obamacare on the CGT, and income tax (c25%) on the depreciation. Because the UK gain is considered income and if you exceed $450k income you Pay 20% otherwise 15%. I believe the obamacare tax is only for the 20%'ers.

Does this sound right? Can anyone who has sold their UK property comment on their actual experience? 

One next step is to phone the IRS to get their version and see if aligns with the accountant.


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## Bevdeforges (Nov 16, 2007)

Did you sell your house in the UK in 2012 or in 2013? It will make a big difference. If the sale was in 2013, you'll have to wait a while to get your answers as they've only just got all the 2012 forms updated for last minute changes. The 2013 forms and publications won't start making their appearance until August or September at the earliest.

Also, call the IRS if you like, but just be advised, you can't rely on any answer you get by phone. The only way they'll stand by an answer they give you is if you request an IRS ruling letter - and those take a long time to get.
Cheers,
Bev


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## jnelson (Feb 4, 2013)

Bev, we would be selling in 2013. So we won't actually have a crystal clear picture on taxes until later in the year. 

I have beem reading the tax treaty betweeb the UK/USA (2001 & 2004) and CGT - while I am no lawyer. Specifically Article 4 Para 4 section c "if he has an habitual abode in both States or in neither of them, he shall bedeemed to be a resident only of the State of which he is a national.

I need to clarify if what was our UK home and now a rental can be classified as a 'habitual abode' . As a UK national I can then possibly reflect UK CGT (0) rather than the US ( a serious chunk of $). 

I will update once I find out.


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## Bevdeforges (Nov 16, 2007)

From what I understand you are currently resident in the US. (On a green card?) That kind of gives you a "habitual abode" - or so I would think.
Cheers,
Bev


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