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Discussion Starter #1
hi -
Once my UK citizen husband sets foot in USA as a PR, does the sale of our house in UK fall under US tax rules or will it be under UK?

Its our primary house and he's owned it 12 years. There is no capital gains tax on primary homes in UK, from my understanding.

Our new home in USA will undoubtedly be valued less than the one here.

We are just wondering - should we sell BEFORE he becomes a US Permanent Resident?

Thank you in advance!
 

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Closing the sale of the house BEFORE your husband becomes a permanent resident will definitely simplify the whole issue. As soon as he becomes a pr, he has to declare all worldwide income to the IRS - whether or not it's subject to tax in the US.

Basically, once he's subject to US taxes, you would have to report the sale - and then you'd be able to exclude up to $250,000 or $500,000 of the gain on the sale. Download a copy of IRS publication 523 for all the qualifying details (for some reason, only the 2008 version of pub 523 is available on the IRS website). Or take a look at Chapter 15 in publication 17.
Cheers,
Bev
 

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Discussion Starter #3
thanks - one more ?

Closing the sale of the house BEFORE your husband becomes a permanent resident will definitely simplify the whole issue. As soon as he becomes a pr, he has to declare all worldwide income to the IRS - whether or not it's subject to tax in the US.

Basically, once he's subject to US taxes, you would have to report the sale - and then you'd be able to exclude up to $250,000 or $500,000 of the gain on the sale. Download a copy of IRS publication 523 for all the qualifying details (for some reason, only the 2008 version of pub 523 is available on the IRS website). Or take a look at Chapter 15 in publication 17.
Cheers,
Bev
Hmmm. Do I have to be on the title/sale for us to take the exclusion for joint/married $500,000?
Thank you for confirming !
 

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Hmmm. Do I have to be on the title/sale for us to take the exclusion for joint/married $500,000?
Thank you for confirming !
I'm only done a skim of the info on the exclusion, but I think the key factor is whether or not you both meet the residence requirements (i.e. was the house your primary residence in two of the last 5 years - or whatever the requirement is). If you don't meet that one, then he only gets the single exclusion (i.e. $250,000). Whose name is on the title is less important.

Do check the pub 523 or the chapter in pub 17, though, to make sure. (Also to figure how to calculate the capital gain on the sale of the house. There are a number of "fix up costs" you can add back into the basis.)
Cheers,
Bev
 
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