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Discussion Starter · #1 ·
Hi - can anyone elaborate on the $500K Capital Gains allowance?

I have owned the property for 5 years and plan to sell in the next year (I am planning to move to the US in the next 6 months).

(i) Is there anyway online I can calculate/check the capital gains with the official rules of what is allowed to offset the gains and appropriately consider the fx fluctuations

(ii) How do you qualify for the Married Capital Gains allowance? (Silly Question, but I am married to a US but the UK property is only in my name.) If we file joint married taxes in the US, will we that still qualify for the $500k Capital Gains allowance?

Is there anything else we need to consider to make sure we will be able to qualify for the Capital Gains Allowance?
 

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Have moved you over to the Expat Tax section, as this is one of those issues that comes up quite frequently for families moving to the US from just about anywhere.

First of all, if you can manage to sell the house before you move, you aren't subject to US taxes until your move date at all. So, problem solved!

But, barring that fortunate happenstance, all the official rules are explained in IRS Publication 523: https://www.irs.gov/publications/p523 which will give you an idea of things like "fix-up" expenses you can add to the basis in order to calculate the ultimate gain, etc. And, just because it's not entirely clear from your post - just be advised that the $500,000 exemption applies only to owned property that has served as your primary personal residence for a minimum time within the last 5 years. (I think it's two years - but the publication will have that information.)

You can file jointly with your wife, but if you do, you'll be treated as a US resident for the entire tax year for which you are filing jointly. That has advantages and disadvantages you may want to consider before you decide.
Cheers,
Bev
 

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Discussion Starter · #3 ·
Married allowance CGT Allowance

@Bevdeforges - Thank you for your thoughts.

A further question is if the house needs to be owned jointly in the UK - or if we can take advantage of the full $500k married CGT allowance if only one of us own the property, if we file taxes together in the US?

We will do more work on the advantages/disadvantages of filing jointly in the US.

Thanks
 

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Not sure if the issue of joint ownership of the house is covered in publication 523, but if it isn't, I'd be inclined to take an "aggressive tax position" and just claim the full exemption and see what they do. I know in the opposite situation (i.e. when one spouse is filing married, filing separately) and doesn't claim their "their" half of bank interest or whatever in the non-US citizen's accounts there's not much the IRS can or will do. You don't normally have to provide any "proof" of the ownership of big financial assets like that.
Cheers,
Bev
 

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Hi jerrym,

If the disposal takes place whilst UK Non-resident please be aware that following the changes to capital gains for UK Non-residents, a UK Non-resident owner who makes a disposal of a UK residential property is now required to file the Non Resident Capital Gains Tax Return (NRCGT) to HMRC with the deadline to file this being within 30 days of conveyance.

If the disposal is not reported within 30 days a late filing penalty will be issued and deferment of the payment of any capital gains tax due may not be granted and may become immediately payable.

If the interest in the residential property was held jointly, each individual must file a NRCGT separately notifying their own share.

The above also applies even if you have disposed of only part of an interest in a UK residential property.

Obviously, as the deadline is very tight careful planning is of great importance.
 
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