# US Citizen selling Uk Property Tax implications



## Newsbunny (Sep 29, 2010)

Can anyone help please with a US tax question? My husband and I have been married and have lived in the in the UK for the past twenty four years. We are now thinking of selling our family home in Surrey, to downsize, now that the kids are beginning to leave home for University etc.

In those twenty four years I have continued to file my US TAX return every year and when our kids (now 18 and 20) were first born I have filed for them as well.

My husband has always been and will remain a UK Citizen. He has never had any dealing with the US tax authorities. As he says, he likes my country but loves his own.

We bought our current home 15 years ago for £200,000. If it sells in the next few months we will probably clear about £800,000 after the agents fees.

The house was bought in our joint names 15 years ago. Will I, the US passport holder, have to pay US capital gains tax on my share of the sale?

Assuming the profit on the sale is £600,000 my share is £300,000. Roughly $500,000. I understand that the US personal allowance on property is only $250,000?

My husband keeps muttering about "no taxation withour representation" - he thinks that we shouldn't pay any US tax on the property as there is no UK tax to pay on it and we don't live in the US.

Does anyone out there know what the situation is and how much tax we are going to be liable for? Is there any LEGAL way around it?

Best Regards

Newsbunny.


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## Bevdeforges (Nov 16, 2007)

Welcome to the wonderful world of US expat taxes!

One of the "gotchas" about filing taxes as a US citizen resident overseas is the bit where we have to file as "married filing separately" if we're married to a "non-resident alien." You might want to research a bit on the IRS website to see what (if anything) you can find about the need to split the gain 50-50. If you contributed a smaller portion of your own money toward paying off the mortgage or to the initial down payment, you might be able to justify reducing "your" portion of the gain to fall under the $250,000 figure - and if that's the case then you don't have to report the sale at all on your US taxes.

To help you in that, too, don't compare your proceeds on the sale to what you originally paid for the house, but check the information on "determining the basis of the property" (Pub. 523) to see if you can justify adding improvements and all to the basis to further reduce the gain.

Several years ago I stumbled onto something in Pub 54 (for us overseas residents) that indicated that you do not have to split the household income in half when filing as a US citizen married to a NRA, even if you're in a country where you are considered to have the right to 50% of household income - but of course I can't find that same section again recently. I would try to take the same stance on the home ownership - if your husband's income over the time you've owned the home is larger than yours, I would split the ownership interest (and thus the eventual gain) accordingly.

This is, however, what we used to call "an aggressive tax stance" back at Price Waterhouse. I can't guarantee it will fly, but it might be worth the attempt.
Cheers,
Bev


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## Newsbunny (Sep 29, 2010)

Bevdeforges said:


> Welcome to the wonderful world of US expat taxes!
> 
> One of the "gotchas" about filing taxes as a US citizen resident overseas is the bit where we have to file as "married filing separately" if we're married to a "non-resident alien." You might want to research a bit on the IRS website to see what (if anything) you can find about the need to split the gain 50-50. If you contributed a smaller portion of your own money toward paying off the mortgage or to the initial down payment, you might be able to justify reducing "your" portion of the gain to fall under the $250,000 figure - and if that's the case then you don't have to report the sale at all on your US taxes.
> 
> ...


Thank you so much for taking the trouble to repond. Much appreciated. Newsbunny


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