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Complex family situation we're trying to decide what to do with - does anyone know about the implication of selling land in the USA?
Basically, we (parents and I) own some land in Maine. We've been approached to see if we want to sell it to a conservation charity - it's untouched waterside woodland and they want to preserve it. Complication is that Mum and I are US citizens, Dad isn't. Another complication is we've lived in the UK for 38-40 years and don't pay US tax of fill out IR tax returns.
Mum especially is worried about the IR taking an interest. We'd have to pay capital gains tax presumably, but in the US or the UK, or both? Is it better to have the property in single ownership rather than joint?
My personal view is we should just sell it and tell the IR to go swivel if they ask, but that's perhaps not the best strategy!
Cheers 😉
You're on the hook for US taxes even if you pay tax elsewhere - they are frankly bastards, but you get a freebie if you make less than something like $80k a year. Also they are implementing a new legislation that lets them help themselves to your bank account if they *think* you owe them taxes.
I'm not seeing benefits to being a US citizen if you're living here.
Well, yes - trouble is to buy yourself out of being a US citizen costs £2000 plus filing all back tax returns. Which is a colossal PITA - not many US tax lawyers in Glasgow.
Daft thing is I was born in Scotland and have never lived in the US.
So untouched land you've not been using?
Charitable donation to the charity with terms that it cannot be used for anything else other than fallow land?
PayPal gift 😉
Yes, that's definitely a possibility. Can also get a thing called an easement, which means we keep it but no-one's ever allowed to build on it. If it wasn't for the property taxes that have to be paid every year, that'd be a good option too.
Maybe worth a look...
[url= http://www.landtrustalliance.org/what-you-can-do ]http://www.landtrustalliance.org/what-you-can-do[/url]
Edit - A conservation easement can significantly reduce the property taxes that have to be paid
Can you do the transaction in the UK?
I don't see how - property deeds have to be changed in the States, presumably, and the charity buying is in the States.
A 2 tier payment then?
A nominal charge for the land paid there and a "consultancy" fee paid here.
Used to do something similar in property development in Oz. Sell a block with a price on the land and a price on the intellectual property involved in the planning etc. That wasn't to avoid tax though, more to reposition it.
Transfer ownership over several years such that the value in any one year falls below the tax threshold. When we did something similar the limiting factor was gains tax in the uk.
Their are reciprocal tax arrangements between US and UK so you won't pay your capital gains tax twice. However depending on the sums involved you need to talk to an accountant that has experience in US tax law - which some UK tax accountants have.
Interesting - does even transferring ownership between family members lead to gains tax?
It sounds beautiful - have you got any photos to pretty the thread up?