Moving back to the States

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Moving back to the States


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Old 30th August 2020, 12:44 PM
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Default Moving back to the States

Good afternoon. I've been living in the UK for the past 21 years, I have a mortgage on our house which we hope to have paid off or nearly pay off before we move. My US taxes are up to date and now my wife and I are planning to move back to the US in the next couple years. So I was wondering how capital gains tax work? For example, say I sell my house for 450 thousand pounds sterling here in the UK. At the time the exchange rate is, say $2.00 to the pound, so I end up with 900 thousand dollars to use to buy a modest house and bank the rest. If I do have to pay tax, do we pay before we move or after we buy our new home in the states, or do we pay when we file our tax returns?

Thanks for your help.

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Old 30th August 2020, 01:29 PM
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From what you write, I'm assuming that you are a US citizen - but that your wife is not. (Not sure of that last point.)

For US tax purposes, you will owe taxes on the gain on the sale of your UK home only on the amount by which the gain exceeds $250,000 (or $500,000 if you've been filing joint returns with your wife).

If the house is owned jointly and your wife is not a US citizen/taxpayer, then you can reasonably claim only one-half of the gain on your US tax returns.

If you do things strictly by the book, you need to calculate the original basis in the house at the exchange rates as of the date of purchase (for original purchase price) or the date of any renovations, improvements that add to the basis.

Publication 523 gives you all the details you need. https://www.irs.gov/publications/p523

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Old 30th August 2020, 05:02 PM
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Hi and thanks for the info. Yes my wife is a British national. So since I've been filing my tax returns I have not been filing jointly. I will look up that info. Thanks again for your help.

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