Moving Money to US

[rjm_cmyk 75]

All being well I will have a large chunk of equity from the sale of my house in the UK to transfer at some point to the US. Given the direction of travel of the £ v $ it might be best to wait and see/hope that there is an improvement .

AIUI the IRS will not tax me on the income from the sale of a primary property being transferred to the US. If I did it in chunks over a couple of years is there a risk they would revisit that position ?

Also - does anyone know if the forex companies will offer a fixed forward price without any commitment on my part. I'm wondering if I can agree a fixed rate in advance. I'm going to contact a couple this week so any recommendations gratefully accepted.

TVM

[KLB 3]

All being well I will have a large chunk of equity from the sale of my house in the UK to transfer at some point to the US. Given the direction of travel of the £ v $ it might be best to wait and see/hope that there is an improvement .

AIUI the IRS will not tax me on the income from the sale of a primary property being transferred to the US. If I did it in chunks over a couple of years is there a risk they would revisit that position ?

Also - does anyone know if the forex companies will offer a fixed forward price without any commitment on my part. I'm wondering if I can agree a fixed rate in advance. I'm going to contact a couple this week so any recommendations gratefully accepted.

TVM

I'm in the same boat as you ... do let me know if you find a Forex Company that would be prepared to do that, I doubt they will ... please don't quote me but "if" my understanding is correct when you buy at a forward rate the Forex Company are committed to buying those dollars from the market therefore they are not going to risk the possibility of not having that covered.

[Sunshine25 17]

I would definitely wait until the rate is better or until you really need it. You get a much better interest rate in the U.K. My savings account in England gives me 2.25% interest, in the U.S I get 0.14%

[Nich-Nick 3,354]

Don't forget that when you become a US taxpayer you may need to fill out the FBAR or the FATCA to report accounts you have in the UK.

Links are to IRS explanations. We have done FBAR every year because of a UK bank account. It is not part of tax filing and is mailed yearly to the Treasury Dept by June 30. The FATCA was required with the tax return starting last year. It is for higher dollar investments.

[HikerMark 5]

Provided you satisfy the IRS regulations for disposal of a main residence most if not all of the gain on the sale of your UK home will be exempt from US tax. It won't matter how you get the proceeds to the US the disposal happened on the date of disposal. Whether it will even impact your US tax return will depend on how you file for your first US tax year. There are at least three different scenarios to calculate for the first filing to see which one is best for your circumstances.

[rjm_cmyk 75]

Thanks for the comments guys. Will be having a chat with a forex company next week and will report back then. I suspect they won't let me pre-buy with no committment on my part.

[marriott574 13]

I wouls wait my banker friends in London think the pound will gain a little bit against the dollar later in the month

But they are bankers so have no idea what to do.

[seafoodman 0]

Its a dilemma what to do ! Im selling my house at the moment and will have equity to take with me to the States,but with the housing market as it is,and offers less then what i paid for it years ago along with the poor exchange rate,my two landlord pals are advising me to rent it for a year or two,or even to rent it for longer since my fiance has her own home,one of my neighbours who recently retired has bought a terraced house for cash,stating that they can get a bigger investment from it than from keeping their money in a bank account ! The only reason putting me off renting it, is the IRS,i seem to remember reading that you have to live in a house for 3 out of 5 years otherwise they hit you with tax on the equity should you sell it after the 3 years ? the other thing i have considered is to put the equity into a UK bank for two years at a rate of 2,75% interest and wait for an improvement on the exchange rate,that will give me time to settle into US life,get a green card,residency,get to understand the US mortgage system and if i can pay off my fiances mortgage without incurring penalties etc Friends in detroit have kept an english bank account open with some of their equity, so that they have money when they come over without having to change money ! and they say its a bit of a safety net till they get residency and their own home,they rent at the moment ? Its hard to know what to do for the best,even the banks and politicians dont know what to do ?

[HikerMark 5]

Yes you are right, that after a certain time period all of the gain on the sale of the property will be taxed by the IRS. Basically you have to have owned and lived in the property as your main residence for at least 2 years out of the last 5 years up to the date of disposal. That means that after you move out and start renting, most of any gain from a sale in the next 3 years will be tax free up to $250,000 (maybe $500,000 if you satisfy the married conditions).

Some of the gain will be taxed because the US allows a depreciation deduction for the cost of the property and that will be clawed back on the sale.

If you sell after 3 years all of the gain would be taxable in the US. This contrasts with the UK where the time period that you lived in the property is used to exempt part if not all of the gain even for rental properties.

Note that you would also be reporting the rental income to both the IRS and HMRC with a tax credit available to you on the US tax return for any UK tax paid.

Edited March 6, 2013 by HikerMark