RENTING PROPERTY OUT IN THE UK

[manyfudge 291]

No need to set up LLC.

 

You need to figure out how to depreciate properly.

 

Might be easier to take out a loan and pay off with rental income.

 

Then use loan proceeds to invest.  Treasury ladders yielding 5 %.

[Boiler 45,468]

The way the UK operates and the way the US operates regarding rental property is very different.

 

Capital Gains can be interesting as well.

[manyfudge 291]

31 minutes ago, Boiler said:

way the UK operates and the way the US operates regarding rental property is very different

I own UK property that was used as a rental.   It’s not relevant to me how the UK treats rental as I am not UK tax resident.

 

My UK property is treated the same as if it were in the US.

[Redro 4,611]

21 hours ago, Lm126 said:

I really don’t want to sell it. I want to explore all other options first. wondering if I set up a Ltd company with a family member as director and have them handle it without the need to complicate US taxes. Do I only pay taxes on profit? If I don’t take dividends would this essentially cancel out the complication 

 

38 minutes ago, manyfudge said:

I own UK property that was used as a rental.   It’s not relevant to me how the UK treats rental as I am not UK tax resident.

 

My UK property is treated the same as if it were in the US.

It appears as it OP does not want to treat the UK property as if it were in the US though...  they're trying to keep it all in the UK. 

[manyfudge 291]

19 hours ago, Redro said:

does not want to treat the UK property as if it were in the US though...  they're trying to keep it all in the UK. 

No way to do that.

 

Any income generated will be taxable in the US.

 

Can just reduce to zero income by taking mortgage instead of trying to own a foreign LLC  - which then still has to pay OP.  Once any $ crosses over as income, it becomes taxable even if there is a way to create a foreign LLC that is not of taxable interest to US.

[Redro 4,611]

1 hour ago, manyfudge said:

No way to do that.

 

Any income generated will be taxable in the US.

 

Can just reduce to zero income by taking mortgage instead of trying to own a foreign LLC  - which then still has to pay OP.  Once any $ crosses over as income, it becomes taxable even if there is a way to create a foreign LLC that is not of taxable interest to US.

You know that. 
I know that.

OP most likely needs to talk to a professional to best realize their goals. 

[Lil bear 4,189]

2 minutes ago, Redro said:

You know that. 
I know that.

OP most likely needs to talk to a professional to best realize their goals. 

Or,more likely, realise their goals aren't going to work ..the US tax system is a bigger, more confusing hole than USCIS ! 

[TBoneTX 45,267]

1 hour ago, Lil bear said:

the US tax system is a bigger, more confusing hole than USCIS ! 

Real.

This is perhaps why we should wait until the OP has a chance to consult a CPA or tax attorney.

It will be interesting to hear the recommendations.

[Lil bear 4,189]

2 hours ago, TBoneTX said:

Real.

This is perhaps why we should wait until the OP has a chance to consult a CPA or tax attorney.

It will be interesting to hear the recommendations.

Yes for sure. No “P math” needed here 🤪

 

The challenge is finding one who has expertise not just “ book knowledge”. Thinking we were getting the first,  but finding out it was the second, cost us $1500 on our first tax year here 😵‍💫🤬😓

Edited December 29, 2023 by Lil bear

[Lm126 1]

Thanks everyone for your advice!! We have been trying to find a specialist accountant, and someone who knows international tax law, and have spoken to an agency that deals with non-resident landlords in the UK but so far we're not getting the answers we need, but we will keep looking! 

We are still in the processing stage of our petition (submitted march 2023 VJ est Feb for NVC stage) so hoping we have it sorted before moving on to the next stage. Worst case scenario, we can hold off sending further paperwork to complete the visa until I know fully where we stand with the house. Thanks again!

[Lm126 1]

On 12/28/2023 at 8:49 AM, appleblossom said:

Absolutely no point in putting it in a Ltd company as it will cost you a lot to do so (different if you’d purchased it through a Ltd company though). We do have a Ltd company with investment properties and didn’t even contemplate moving our family home in to it as we’d have lost a fortune, even with being able to claim interest as an expense. 
 

We rent our home, just filled in the HMRC non resident landlord form and will do self assessments. Most expenses can be claimed against any tax due. We don’t use an agent, we did it all ourselves using OpenRent, our home is worth a lot in rent and I couldn’t bear the thought of losing so much each year to agents that wouldn’t do much to earn it! But we have rented numerous properties (we always use OpenRent) and perhaps if we didn’t have that experience, and the property had a lower rental value, we might have done it differently. 
 

We are lucky and have excellent tenants, it’s a risk but if you have family there that can keep an eye on it that helps. 
 

Just be aware of Capital Gains Tax - the US is particularly brutal on this, particularly if you’ve owned the property for a long time. 

This sounds exactly like what I want to do. Can I ask if the rent you get from your home property gets paid in to a UK or US bank account? The thought of losing my little cottage AND losing out on a decent rental profit is killing me! lol

[appleblossom 2,482]

6 minutes ago, Lm126 said:

This sounds exactly like what I want to do. Can I ask if the rent you get from your home property gets paid in to a UK or US bank account? The thought of losing my little cottage AND losing out on a decent rental profit is killing me! lol

It gets paid in to our UK bank account. We are lucky enough that we don’t have housing expenses in the US, so we leave it in the UK and it then covers our mortgage payments there (which come out of the same account), and the remainder stays there for us to pay extra chunks of the mortgage off every so often when it builds up. It also means we have a safety net there if we had something major to pay out for i.e. if the heating system suddenly went kaput. 
 

I’m not sure you could have rent paid in to a US account anyway (as it would cost your tenants each time to transfer it, so not sure they’d be thrilled with that idea), but for us it just makes sense to leave it in the UK as that’s where the money is taxed first and where all expenses are paid from. 
 

We have tax advisors and are quite happy with our strategy. Obviously we’ll have to declare our UK property income on our US tax returns but for us personally, there will be no US tax due on it. You are definitely best to get good advice on that though as it will depend on your own circumstances. 
 

Good luck. 
 

 

Edited January 7 by appleblossom

[Lm126 1]

3 minutes ago, appleblossom said:

It gets paid in to our UK bank account. We are lucky enough that we don’t have housing expenses in the US, so we leave it in the UK and it then covers our mortgage payments there (which come out of the same account), and the remainder stays there for us to pay extra chunks of the mortgage off every so often when it builds up. It also means we have a safety net there if we had something major to pay out for i.e. if the heating system suddenly went kaput. 
 

I’m not sure you could have rent paid in to a US account anyway (as it would cost your tenants each time to transfer it, so not sure they’d be thrilled with that idea), but for us it just makes sense to leave it in the UK as that’s where the money is taxed and where all expenses are paid from. 
 

 

Thank you so much for your advice! So helpful!! 

[Chancy 6,241]

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