Capital loss in UK and gain in USA – What CGT do I pay?

Capital loss in UK and gain in USA – What CGT do I pay?

10:07 AM, 6th December 2017, About 4 years ago 21

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I am selling one of my rental properties in the UK at a loss. Next year I shall be selling my holiday home in Florida at a good profit.

My accountant has confirmed that I will be able to offset the UK loss against the US gain. However, he’s not very clear on whether I would have to pay CGT in the USA.

I’m not back in the US until February and would like some answers before then as I need to plan the sale.

I know some 118-ers have US property (Mark?) Anyone know about UK/US tax arrangements, or recommendations for an accountant who may know?

Many Thanks




by Mark Alexander

22:38 PM, 6th December 2017, About 4 years ago

Reply to the comment left by Annie Landlord at 06/12/2017 - 21:32
OK, just wondered.

She’s not somebody I ever came across but I do know quite a lot of Realirs in Florida, hence my question

by Annie Landlord

22:39 PM, 6th December 2017, About 4 years ago

She used to work for Century21 but set up on her own a year or two ago, and is doing very well. Not part of the 'Orlando Set' though

by Simon Misiewicz

0:30 AM, 7th December 2017, About 4 years ago

We are setting up shop in Florida as we speak. Sadly USA property is foreign tax and cannot be offset against UK tax.

Where is your house in Florida? If anywhere near Naples give me a shout.

We are looking to hire CPAs as service in the US often is not as good as it should be, rather surprisingly.

by andy adewale

11:25 AM, 7th December 2017, About 4 years ago

Reply to the comment left by Annie Landlord at 06/12/2017 - 13:07Hi Ann
His details are as follows:
David A. Bloom, CPA
Silverman, Kaplan & Sakwa, CPA’s, PC
29200 Northwestern Highway, Suite 150
Southfield, Michigan 48034
Office 248-358-4121
Fax 248-358-3394

Do feel free to let David know I gave you his details. I will email him now to expect contact from you.

by andy adewale

16:01 PM, 7th December 2017, About 4 years ago

Hi Annie
Further to my previous comments, I have flagged your question up to our CPA David Bloom and he has responded to me with the following comments which I hope is useful to you. You may of course contact him for more detailed advice as required.
"A non resident alien individual is subject to US income tax on capital gain on disposition of real property located in the US. The title agency who handles the closing will likely be required to withhold US tax from the sale proceeds. The taxpayer could then file a US income tax return and possibly receive a refund of the tax"!
Good luck with it.

by Annie Landlord

10:52 AM, 8th December 2017, About 4 years ago

Reply to the comment left by andy adewale at 07/12/2017 - 16:01
Thanks for that Andy. A percentage of the profits will be definitely held back, though I can apply for an earlier return by completing the correct form. I have just discovered that my realtor's sister in the US is a tax adviser, so I will see what she says too. Although I can't utilise my UK personal CGT allowance I may pay a lower rate in the US, as most of the gain under UK law would be at 28%. Swings and roundabouts!

by Nick Pope

9:01 AM, 9th December 2017, About 4 years ago

My understanding is that CGT in the US reduces the longer you own the property but I don't know how that is calculated. If you think HMRC rules are complicated try Infernal Revenue. You are also allowed to offset historic losses and capital improvements to the property.
There are also State CGT taxes but in Florida these arrear to be payable over $250,000 for each owner.
As has been mentioned above the closing agent is required to withold about 20% until the tax has been finalised.
There is a reciprocal agreement with HMRC and any gain (after deduction of the US tax payment if any) is then subject to CGT here. The figures need to be re-calculated as the allowances are different.
I bought many years ago when the £ was approx. $2 so I have made a good profit simply from recent currency fluctuations.
I am less clearon the situation regarding the loss here being offset against the US gain but it would seem probable that this would be allowed.
I reckon the accountants in both countries will have a field day!
I can let you have the contact for my accountants in Florida if you wish - they deal with many UK property owners there and they apparently have representation here so that they can liaise and come up with the best strategy for saving tax.

by Annie Landlord

10:34 AM, 9th December 2017, About 4 years ago

Reply to the comment left by Nick Pope at 09/12/2017 - 09:01
Hi Nick,
yes, my friends in Florida have told me all about the IRS! I have gathered a lot of info already, just waiting for the US tax adviser to contact me. It would be helpful to have your Florida accountant's details please. CGT does start reducing in the US after the first year of ownership but I know I have to pay the higher tax, whether that will be the UK or the US calculation I'm not sure yet.

by PaulM

11:04 AM, 9th December 2017, About 4 years ago

Annie, it will be interesting to hear how you get on please.
When I purchased in 1995, the exchange rate was well over 2 and whilst I don't want to sell out of Florida, I would like to trade up to something new. I can't carry the gain forward or move the ownership into an LLC (to protect us against any form of lawsuit) without paying all the gain taxes. so if anyone has any suggestions, I'm all ears.

by Nick Pope

12:14 PM, 9th December 2017, About 4 years ago

Reply to the comment left by Annie Landlord at 09/12/2017 - 10:34
My accountants over there are:
Harding Bell International, Inc.
8687 West Irlo Bronson Memorial Hwy, Ste 206
Kissimmee, FL 34747
Telephone +1 (863) 968-1010
Despite 1 comment on web we have found them to be very efficient over the last 12 years. They are also often represented at the Floriad holiday home roadshows in this country.

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