# Selling house in UK. (Bev?) tax implications



## Shipresa (Dec 9, 2008)

I know this has come up before...but I'd like some opinions and get it straight.

I am USC, my husband is UKC and will have his US spouse (immigrant) visa later this month.

Our house goes on the market in a few days. Our plan is to sell it before we go. The house is in his name.

Please let me know if I'm right or wrong in the following:
1. Husband only starts to be liable for US taxes the day he arrives.
2. As we are selling the house BEFORE he leaves, this will not have any tax implications in the USA.
3. *If* we sell after he sets foot in USA, he can exclude $250,000 of gains (or $500,000 in gains as are married and can file a joint return,) We fall under all those rules for exclusion (i.e. 24 months primary, etc.). Gains will be more than $250k... 

Now my questions:
1. The house is in his name but our bank account is joint. Should he have the proceeds of the house put into his own bank account?
2. Scotland's house selling rules mean an offer is made, it is accepted, then it could take up to 6 -8 weeks for the money to be collected/banks/provided to his bank account (at which time we hand over the keys.) Should he not physically leave the UK until the money is in the account? Do we have to do that additional wait for proof it was BEFORE he became a Permanent Resident in the USA?

All thoughts appreciated, and we are prepared to do what is required in terms of waiting it out in UK as long as need be as to be sure to not have to pay taxes on the gains from this house sale. (Yes, the house will sell. Its like that up here in NE Scotland/Oil land.)


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## Shipresa (Dec 9, 2008)

*Just read pub 523*

Oh no - BOTH spouses need to have 'use' test, I've only lived in this house for 18 months. He's lived here for 10 years. So only HE can exclude $250,000.

If we move AFTER the sale, then he's not at all liable in the least to the USA, even though he'll be filing taxes for 2010....correct? He'll only file from his ENTRY date, right?

(Now worrying!)


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## Joppa (Sep 7, 2009)

Shipresa said:


> Oh no - BOTH spouses need to have 'use' test, I've only lived in this house for 18 months. He's lived here for 10 years. So only HE can exclude $250,000.
> 
> If we move AFTER the sale, then he's not at all liable in the least to the USA, even though he'll be filing taxes for 2010....correct? He'll only file from his ENTRY date, right?
> 
> (Now worrying!)


As far as his UK tax liability is concerned, there is none, because of principle private residence relief for capital gains tax. So provided the house has been his main residence, then it's exempt from any tax on capital gains, no matter how great. There is no limit as in the States.
Read Tax relief when selling your home : Directgov - Money, tax and benefits, as there are exceptions, for example, when part of the house has been used for business purpose (an office, for example, and tax relief gained).
As he is not a US citizen and has not begun his residence in US, and since the house is solely in his name, I can't see how any US tax liability can arise, either for you or your husband, regardless of when the sale proceeds are credited to his bank account. 
But this is only my personal view, and you should get professional advice.


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## Bevdeforges (Nov 16, 2007)

OK, don't worry about the bank account. If the house is in his name only, it doesn't really matter what you do with the money after he gets it.

I'm not sure if it's absolutely necessary but it probably would be best for your husband to stick around in Scotland until the sale of the house is "closed" - i.e. you've concluded the sale and handed over the keys. That way his entry visa is stamped with a date after the official date for the sale of the house and there is no question.

It may complicate things for your tax return for 2010 a bit, since you have the "option" to consider him resident for the full year in his year of arrival - and you have to elect that option if you want to file jointly for 2010. Otherwise, you each file separately - in which case he only needs to declare his worldwide income from his entry date. There are some minor inconveniences in filing separately, but you probably won't run into any of them in your first year back in the US. (Main things I'm aware of relate to taxation of social security benefits and eligibility for those new Roth IRAs - neither of which you're likely to run into right away.)
Cheers,
Bev


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## WalkAbout (Jun 17, 2011)

*Hoping you're still out there*

Shipresa, I came across this post from a few years ago and was wondering how it turned out. I am in the exact situation. I'm selling my house in China but will most likely be in the US as a resident before the sale goes through. I'm interested to know if there was a happy ending to this story.


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## Bevdeforges (Nov 16, 2007)

WalkAbout said:


> Shipresa, I came across this post from a few years ago and was wondering how it turned out. I am in the exact situation. I'm selling my house in China but will most likely be in the US as a resident before the sale goes through. I'm interested to know if there was a happy ending to this story.


If you're resident in the US when the sale goes through, you're subject to US taxes on the sale - but if it's your primary residence that you are selling in China and you meet the other requirements, you can generally exclude the first $250,000 of the profit on the sale (twice that if you're married and filing jointly).

If that is your case, there are a couple of publications on the IRS website you can consult as you'll want to see the exact procedures for determining your profit on the sale of a primary residence. There are considerable items you can add to your basis (i.e. original cost of the house).
Cheers,
Bev


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## WalkAbout (Jun 17, 2011)

*Confident now*

Thanks Bev. I have checked all the IRS requirements. I have indeed lived in the house as my primary residence together with my wife for the past 2 years (we were also married more than 2 years ago). The house is only in my name but that seems to be ok. We will be filing jointly and I'm expecting the $500k exemption which luckily just covers our capital growth.

Thanks for responding so quick, WA


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