Selling UK Property - Dual US/UK Citizen

OneADay

Could someone advice on the situation where someone originally from UK but now with dual citizen in US sells a property in UK.

What are capital gains rules applied in US?

The property will sell before 5th April 2015.

G_M

Ring the HMRC and check, but I imagine if you have UK citizenship, and the property is in the UK, then UK CGT rules will apply.

As for the US - no idea.

SnooksNJ

OneADay wrote: »

Could someone advice on the situation where someone originally from UK but now with dual citizen in US sells a property in UK.

What are capital gains rules applied in US?

The property will sell before 5th April 2015.

See Boris Johnson:

http://www.bbc.com/news/uk-politics-30932891

happylucky

Where is your current country of residence.. US? how long did you live in UK property as PPR, recency of occupation as PPR etc are required to calculate your liability In US. Different calculation basis than UK.

You need to speak to a US accountant but I would guess that as per standard US rules you are liable for worldwide taxes to US as a citizen, net of any credits for payments to local countries of (asset) residence as prescribed in dual tax agreements.

I also guess your calcs. will be based on US dollar values so you may benefit from recent upwards forex movement on dollar, which should result in lowering valuation on sterling-denominated assets from a CGT perspective.

A US accountant can advise you further. Good luck.

happylucky

SnooksNJ wrote: »

See Boris Johnson:

http://www.bbc.com/news/uk-politics-30932891

Wow. Great article!! I am wondering how he managed to escape income tax reporting requirements to the IRS for so long...perhaps because he wasn't registered when he left at age 5

US is cracking down big time on off shore tax collection and international data exchange that's for sure.

OneADay

happylucky wrote: »

Where is your current country of residence.. US? how long did you live in UK property as PPR, recency of occupation as PPR etc are required to calculate your liability In US. Different calculation basis than UK.

You need to speak to a US accountant but I would guess that as per standard US rules you are liable for worldwide taxes to US as a citizen, net of any credits for payments to local countries of (asset) residence as prescribed in dual tax agreements.

I also guess your calcs. will be based on US dollar values so you may benefit from recent upwards forex movement on dollar, which should result in lowering valuation on sterling-denominated assets from a CGT perspective.

A US accountant can advise you further. Good luck.

US citizenship in last 2 years to become dual US/UK citizen.
Moved from UK to US in 2007.
Prior to that UK citizen for decades.

G_M wrote: »

Ring the HMRC and check, but I imagine if you have UK citizenship, and the property is in the UK, then UK CGT rules will apply.

As for the US - no idea.

UK CGT applies from 6th April 2015 for overseas residents.
Property sale is before that date.
https://wealth.barclays.com/en_gb/internationalwealth/your-financial-life/could-the-new-uk-property-tax-affect-you.html

SnooksNJ wrote: »

See Boris Johnson:

http://www.bbc.com/news/uk-politics-30932891

I am aware of that.

Dave_the_Ginger_Cat

I would pay for advice from both a US & UK personal taxation specialist.


As I imagine the values at risk here are hefty, I'd recommend certainty

Spidernick

The US also has the concept of a 'Principle Private Residence' that we have in the UK, but there is a cap on the exempt amount, which differs depending on whether you are a single, joint filer, etc. From memory for joint filers gains up to $500,000 are exempt, but I'm not sure what they do if the property hasn't been the main residence for the whole period of ownership.

As above, get advice on this and it would probably be best to have the same person/firm doing both the UK and US tax returns.

happylucky

^^

Don't think the OP will qualify for any US PPR as they haven't been living there as Private Residence for 2 of the previous 5 years, unfortunately. I expect it would be liable for CGT as per investment property.

OP: you do need to get your numbers verified by an expert or direct with IRS/HMRC.

Key questions I'd recommend considering:

US: PPR eligibility, date of base valuation (think this is acquisition not date of immigration), currency valuations at points of acquisition/disposal, allowable deductions etc including offsetting of any UK tax paid on this.

UK: exemption under current (pre April 2015) rules, particularly in light of recent changes to definition of residency, eligibility for CGT allowance if you decide to sell after April 2015 (check dependency on domicile), eligibility for last 18 months as extra PPR and even letting allowance if you have previously lived in this property as your primary residence, should you postpone sale.

Once you have all of this verified and translated into figures in front of you, it may well be that your UK tax is a relative non-issue compared to the US one.

You may not even want to push a sale through now if you're doing it just to beat the April 2015 deadline.

As mentioned, definitely worth getting expert advice. I want to stress that I'm not an expert but have done a lot of international moves....expat taxation is a personal hobby

Best of luck.