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Tax.appeal.168
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If I sell my home (sole residence) in the UK, return to the

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If I sell my home (sole residence) in the UK, return to the US and buy a new one will I be subject to any US tax? I am a US citizen.
Hello, THANK YOU for choosing Just Answer. My goal is to help make your life...a little...LESS taxing.

If there is a capital gain, there may be the possibility that you will have to pay tax on that in the U.S. or the U.K. A capital gain is when you sell an asset for more than what you purchased it for. However, the U.S. has tax treaties with various countries to avoid double taxation. Usually if you have to pay capital gains tax in one country, you won't have to pay it in the other country. There is a tax treaty between the United states and the U.K. Let me take a look at it and I will get back to you with my findings. I will get back to you shortly.

Thank you.
Customer: replied 5 years ago.
As it is my primary home in the UK, I'm pretty sure I won't owe any UK capital gains. The proceeds from the sale of the house will be split between me and my ex.
Hello again,

You are correct, it will not be in the UK, but you will be taxed in the U.S.

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Excerpt from the treaty--Article 13 Capital Gains

Except as provided in Article 8 (Shipping and Air Transport) of this Convention, each Contracting State may tax capital gains in accordance with the provisions of its domestic law.

The U.S. would be considered the contracting state.

Link to the treaty

http://www.irs.gov/pub/irs-trty/uk.pdf

Refer to Article 13

The current capital tax rate is 15%. Please note that to accurately figure the capital gains, you will need to know the original basis (cost) for the property.
Customer: replied 5 years ago.
If I re-invest the proceeds from the sale of the UK house in a house in the US is the capital gains deferred?
Hello again,

After I pressed the Answer key, I remembered that you will be able to exclude either $250,000 or $500,000 since it is your primary residence. Since the laws are for the contracting state... the U.S. $250,000 if you file married filing separately or $500,000 if you file married filing jointly. You can refer to the IRS Publication 523, page 12 for more detailed information regarding the exclusion. Unless the gain will exceed the amounts previously mentioned, there is no need to concern yourself with reinvesting the gain.

http://www.irs.gov/pub/irs-pdf/p523.pdf
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