Buying Property in America
Looking for the ultimate retirement or vacation home? Perhaps you’re excited about taking advantage of the leaps in property prices in America and the very favourable exchange rates currently available for the US dollar.
The partners own letting property in the states, and understand how desirable the market is. Familiar with both US and UK tax systems, we can help you through the maze of taxation.
If you buy property in the USA, you will be subject to Federal, State, and possibly City income taxes. You will be subject to Real Estate Tax imposed by the city your house is in, even if you let it out to others. There are some states, such as Alaska, Florida, South Dakota, Nevada, Texas, Washington, and Wyoming, that are widely touted as having no income taxes, but these are of course made up with taxation elsewhere, such as higher sales taxes or real estate taxes.
If you are UK domiciled, you will have both US and UK tax filings every year. Luckily, the US/UK tax treaty and plenty of local legislation means that you’ll never pay more tax than the highest rate between the two countries. However, some things are tax-free in America and taxable in the UK, and vice versa. This can result is an unfair significant additional tax burden. With careful advance planning of purchase and sale, most of the time these problems can be averted, or at least reduced in scope.
We do this in part by helping you to understand your tax position. An hour’s worth of personal consultation is included in your annual fee (excepting Budget clients). This can be taken through short emails and calls throughout the year, or all at once in an annual meeting. Advice beyond the annual hour will be charged out at our hourly rates.
Included in our annual fee are written guidelines that cover US and UK taxation of your US property. We also provide updates on new laws and how they will affect your property ownership. Upon receipt of our advice letters, if you should have any questions, we are always happy to answer them.
As you are buying property in the US, we offer a full service of advice and compliance. We provide consultation on the best form of ownership – partnership, corporation, LLC, etc. We provide you with a list of all possible deductions to keep track of and consultation on exit strategies. As laws and treaties change, we provide updates regarding tax law changes. We strategize your deductions to have the lowest tax over the life of the property, rather than just the current year. We make sure all of your tax obligations are met each year.
Once you’ve started the legal work, we recommend you hire an independent real estate broker. The US system for buying a house is very different than the UK. In the US, you register with a buyer’s broker, who can then show you all the properties available by every seller in the region. No having to sign up with each agent in order not to miss a property. Agents’ fees are split between the buyer and seller agent, and paid by the seller, so it costs you nothing upfront to register.
For general US immigration inquiries, we recommend the firm of Visas 4 America . Please be sure to tell them you found them on our website. For other legal inquiries, we can make specific attorney recommendations upon your call.
If you need foreign currency exchanged in order to make your purchase, you should try to get the lowest rate possible. For the many banks and exchange services that charge no commission, they obviously make their money someplace else. That place is the “spread”, the difference between the “buy” price and the “sell” price on currency. If your bank or currency exchange service has a spread greater than .5%, we recommend you shop around for the lowest price. We would be happy to give you some recommendations for companies with low fees.
Alternatively, you may wish to consider using a bank that has charges its clients the Interbank rates (fractional or nil spread with zero commission). We will advise on appropriate banks for your circumstances.
If you do not have a mortgage firm lined up, we can also recommend a mortgage provider. However, we strongly recommend you shop around for the best price and interest rate on your mortgage. Prices and rates change constantly, and what is a good deal today may change by the time you get around to buying the property. We will advise on what kind of mortgage makes the most sense for your business plan.
We recommend you seek expert advice for your UK tax preparation. If you are pleased with your current UK accountant, we would be happy to liaise with them regarding any questions that they may have. Should you feel the need to switch providers, we work in conjunction with a partner UK tax firm that specializes in Florida properties. Please let us know if you would like for us to provide you with a quote for UK tax work.