# Currency transfers and capital gains



## mickok (Mar 3, 2017)

My US wife and I moved to the UK in 2013. After a few years she realized it wasn't working for her, so we returned to the USA in 2015. Since we fully intended this to be a permanent move we sold our UK home and moved almost all our funds to a US account (UKP to USD). Sadly things didn't work as planned and I returned to the UK in 2016, moving a smaller amount back to my UK account (USD to UKP) to re-settle myself in the UK. 

My question is: are there US and/or UK capital gains tax implications for any part of the funds transferred from the US to the UK in 2016 that might be considered to have ALSO been a part of the funds that were transferred from the UK to the US in 2015, since of course these were at different exchange rates? Does anyone have experience of this type of situation? Thanks for any help..


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## Moulard (Feb 3, 2017)

I have to admit that I have no experience in this type of situation... but given the paucity of responses I will try to take a stab...

If I read § 988 - (Treatment of certain foreign currency transactions) correctly, then in your scenario... a UKP > USD > UKP transaction is not likely to be subject to capital gains. (unless you used a financial instrument rather than simply an international transfer of funds between accounts)

Conceptually, depending on HM Revenue position, as a UK person you could conceptually be treated as having a taxable capital gain on the same scenario. I am not familiar with UK capital gain taxes so I cannot comment.

Depending on the sums involved, the bigger capital gain question may well be the long term gains between when you sold your UK home 2015 and when you became a US person in the eyes of the IRS. (Citizen, Permanent Resident or choice under Section 6013(g)). While capital gains on the sale of a primary residence is tax exempt in the UK, it is not in the US.

Reading between the lines, it sounds like you were in the US prior and thus may have been a US person prior to then. If you bought your home in the UK in 2013 and sold it in 2015 then you could owe the long term capital gain. 

You may wish to read publication 523.


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## Bevdeforges (Nov 16, 2007)

You have to separate the sale of the house from the movement of the funds. Assuming the sale of the house in the UK was handled according to the tax law in both countries (probably no problem if the gain on the sale was less than the amount exempted from taxation in the US - I think in the UK there is no tax on the sale of a personal residence anyhow), what you have now is a simply transfer of capital.

If you had simply stashed money into your UK bank account, then transferred that to the US, and part of that back again, there would be no tax event (other than declaring any interest paid on the balances in the banks along the way). The exchange difference is not subject to taxation as long as it's just the funds you're transferring from one bank account in your name to another.
Cheers,
Bev


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## mickok (Mar 3, 2017)

Thanks very much, that's very helpful (and thanks for Moulard's previous reply also). The house proceeds are well below the capital gains threshold so no worries there, and I am reporting all interest on bank accounts. I was concerned that moving funds back and forth between accounts where some part of each transfer contained the same funds could be considered currency speculating and potentially liable to capital gains tax, although in my case the transfers were simply driven by life events.

I really appreciate your taking time to help, thank you!


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## Bevdeforges (Nov 16, 2007)

As part of the transfer, you will need to indicate the source of the funds and the purpose of the transfer as part of the bank requirements. (All bank transfers of over $10,000 need this sort of disclosure.) But simple enough to indicate that you're moving funds from one bank account to another to support your move.
Cheers,
Bev


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