How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Merlo Your Own Question

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
Type Your Tax Question Here...
Merlo is online now
A new question is answered every 9 seconds

I have been on back to back assignments with my employer since

Resolved Question:

I have been on back to back assignments with my employer since 2003. Iwas in Spain from 2003 - 2006 and have been here in the US since 2006.   I am now going to localise in the US and need to sell my property in the UK to buy a home here - will capital gains be levied
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.
Hello kshand,

The sale of your home in the UK will be taxed the same as if you sold property here in the United States.

If the home you are selling in the UK qualifies to be treated as your primary residence, then you would be allowed to exclude $250,000 (or $500,000 if married filing a joint return), from any gain you had from the sale. In order to qualify as your primary residence, you must have owned the home for at least 2 years and you must have lived in the home for at least 2 of the last 5 years preceeding the sale.

So it would depend on just exactly you moved out of that home and when you sell it as to whether or not you will meet the use test of having lived there for 2 of the last 5 years.

If you cannot meet the rules which qualify this to be your primary residence, then any gain you have from the sale would be taxed as a long term capital gain, and that tax rate is currently capped at 15%. Using the sale proceeds to purchase another home here in the US or anywhere else would not reduce or eliminate this tax.

You would, however, be allowed a credit for any tax which you also might have to pay to the UK on the sale of this property.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you kshand.

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 7 other Tax Specialists are ready to help you
Customer: replied 4 years ago.

So in the UK I am excluded due to the fact that the reason I have been out the house is due to my employer and being assigned to positions in other countries and this is the sole property I own as I have rented in the US till now. If I understand it well there are no such exclusions and I will have to pay the 15% on gain even though the gain is likely to be only around 100,000 GBP. The intention is to use the gain as a deposit to purchase a home in the US.

 

Is there no right of appeal or any exclusions ?

Expert:  Merlo replied 4 years ago.
Hello again kshand,

Years ago, the IRS used to allow taxpayers who sold their primary homes to reinvest the sales proceeds in to another home, and in doing so they deferred any tax which was due.

Those rules changed quite a number of years ago, and were replaced with the $250,000 exclusion. The exclusion only applies to the sale of your primary residence, and does not apply to any other properties such as a vacation home or rental properties.

In order to qualify as your primary home, you must meet both the ownership and use tests that I mentioned earlier. The only exception at all that is allowed is if you purchase a home and then you are forced to sell it before having owned it for 2 years, if the reason for the forced sale was due to job relocation or medical reasons. In such a case, you would be allowed to exclude a prorated portion of the $250,000.

But there are no exclusions allowed at all for the use test. Once you have owned the home for at least 2 years, you must then also satisfy the use test by actually living in that home for at least 2 of the last 5 years preceeding the sale. I suppose the IRS view on this is that if you moved out of the home 3 years ago, that would have been adequate time to sell the property and still claim the exclusion. Because of that, they do not allow any longer of a time frame for the sale of the home and have it still qualify for the exclusion.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you kshand.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    566
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    566
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3046
    10+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3103
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    CPA, CMA, CFE

    Satisfied Customers:

    3257
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2679
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2219
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.