Foreign home - Tax on income

[The Moose]

rockin said:

Aldos Army said:

would the situation be the same if the property was based in the USA?

Yes, same thing.

It's essential for ex-pat property buyers to register with the IRS and pay US taxes - this typically means completing both Federal and State tax returns and paying all tax demanded. Taxes paid in the US can be credited against any UK tax liability on income or capital gains.

When a property in the US is sold there's a 15% "withholding tax" deducted by the selling realtor and paid over to the IRS. That's not 15% of your capital gain - it's 15% of the selling price. A properly registered ex-pat taxpayer can reclaim that 15% withholding tax subject to deduction of any capital gains tax due or outstanding income tax. Anyone who's not registered loses their 15%.
http://www.tdflorida.com/firpta-sale-of-us-propert...

If you plan, it’s not the end of the world. If you don’t and are a little upside down it can be. I have been told that with the proper planning before purchase, there are ways to avoid some of the issues...but you need to speak to a tax guy before buying the place.

Very sensible idea - stops money draining out of the country when profits may be due.

[C2Red]

The Moose said:

rockin said:

Aldos Army said:

would the situation be the same if the property was based in the USA?

Yes, same thing.

It's essential for ex-pat property buyers to register with the IRS and pay US taxes - this typically means completing both Federal and State tax returns and paying all tax demanded. Taxes paid in the US can be credited against any UK tax liability on income or capital gains.

When a property in the US is sold there's a 15% "withholding tax" deducted by the selling realtor and paid over to the IRS. That's not 15% of your capital gain - it's 15% of the selling price. A properly registered ex-pat taxpayer can reclaim that 15% withholding tax subject to deduction of any capital gains tax due or outstanding income tax. Anyone who's not registered loses their 15%.
http://www.tdflorida.com/firpta-sale-of-us-propert...

If you plan, it’s not the end of the world. If you don’t and are a little upside down it can be. I have been told that with the proper planning before purchase, there are ways to avoid some of the issues...but you need to speak to a tax guy before buying the place.

Very sensible idea - stops money draining out of the country when profits may be due.

This is what I have been informed; there’s some very good advice for owners on top-forums.com for rental and disposal activities with taxes due and how to manage property.

K

[oop north]

The Moose said:

mywifeshusband said:

The rise to 24% mentioned above along with other factors puts a large shadow over the idea.

It's only 5% of the profit surely?

No - currently 19% of profit after deduction of expenses. 24% is on gross revenues before expenses