RENTING PROPERTY OUT IN THE UK

[Lm126 1]

I’m looking for some advice - I own a property in the UK. I ideally want to keep the property when I move to the US, but want to know what the best options are. Rent it out as a private landlord, rent it out as a UK based Ltd company, rent it out under a US LLC? I’m so lost, so any help is appreciated. 

[Crazy Cat 39,363]

I see no need to rent it under a US LLC.  Personally, I would at least consider selling it before becoming a legal resident in the US.  Otherwise, you're going to have complicated US taxes.  

Edited December 27, 2023 by Crazy Cat

[TBoneTX 43,194]

Welcome to the forum.

[Boiler 43,576]

If you ell it to another entity would there be capital gains issues https://www.gov.uk/tax-sell-property/work-out-your-gain

 

And of course:

 

The property tax rate for Stamp Duty Land Tax in England and Northern Ireland is between two and twelve percent for a residential property valued at £255,00 and over £1.5 million. 

[JeanneAdil 6,220]

renting as a private landlord is scary when u r not there to do the upkeep or to see how well a tenant takes care of things 

[Lm126 1]

2 minutes ago, JeanneAdil said:

renting as a private landlord is scary when u r not there to do the upkeep or to see how well a tenant takes care of things 

This doesn’t scare me. I rented from an Australian couple once and never even met them, plus the property is on the same street where a family member lives and family have 5 rentals on that same street. 

[Lm126 1]

21 minutes ago, Boiler said:

If you ell it to another entity would there be capital gains issues https://www.gov.uk/tax-sell-property/work-out-your-gain

 

And of course:

 

The property tax rate for Stamp Duty Land Tax in England and Northern Ireland is between two and twelve percent for a residential property valued at £255,00 and over £1.5 million. 

I really do not want to sell it. As a lot of people now they invest in property as a way of ensuring a decent pension pot

[Boiler 43,576]

1 minute ago, Lm126 said:

I really do not want to sell it. As a lot of people now they invest in property as a way of ensuring a decent pension pot

That knocks out two of the three options.

[Lm126 1]

1 hour ago, Crazy Cat said:

I see no need to rent it under a US LLC.  Personally, I would at least consider selling it before becoming a legal resident in the US.  Otherwise, you're going to have complicated US taxes.  

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 

[Lm126 1]

1 minute ago, Boiler said:

That knocks out two of the three options.

That only eliminates the selling part. Still no idea where I stand with renting. My mortgage is almost paid off so id have no issues setting up a LTd co and getting it under that. But I don’t want to be taxed through the nose for it. If anyone has any contacts for UK or US based advisors who deal with investment under £1m (the ones I found deal with huge amounts of money and obviously im on a lot smaller scale) I would greatly appreciate it. 

[Boiler 43,576]

5 minutes 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 

Corporate Taxes should be disccused with an Accountant.

[Redro 4,601]

3 hours ago, Lm126 said:

I’m looking for some advice - I own a property in the UK. I ideally want to keep the property when I move to the US, but want to know what the best options are. Rent it out as a private landlord, rent it out as a UK based Ltd company, rent it out under a US LLC? I’m so lost, so any help is appreciated. 

This is not the forum to get the best advice.

You should chat to an accountant who is well versed in UK and US taxes to figure out the best way forward. 

Are you trying to save on taxes? Are you trying to figure out where to keep your savings?

We do not know your complete financial picture so cannot guess what you are trying to accomplish.

Passive income while living in the US; keeping the house because you plan to move back to the UK eventually... "security" because you are giving up so much to move to the US and you want to keep a financial tie to the UK in case things go south with your partner... 

You might find it better to use an agency as a go between- as generally they are well acquainted with landlords who live overseas- they will be able to give you some advice or point you in the right direction. 

If you are planning on being a private landlord you might still want to use an agency to help you figure out the financial side of things as your taxes in the UK might also become a little more complicated if you are living overseas... 

 

 

[TBoneTX 43,194]

Accountants to search for in the U.S. would be called CPAs, Certified Public Accountants.

In addition, some attorneys focus on tax law, so perhaps consult some familiar with international tax law.

[NorthByNorthwest 216]

5 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 

 

Any income from rentals worldwide will be taxed as income in the US, but as long as there is a tax treaty in place you get to deduct taxes paid in the UK from what you owe in the US. It gets more complicated though, since you'll be expected to show a depreciation plan and take depreciations accordingly, which will further impact how you calculate capital gains the day you sell it. Not taking depreciation is not an option since IRS will asses the depreciation recapture tax whether you actually took the depreciation or not.

 

In short - get professional advice...

[appleblossom 1,362]

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. 

Edited December 28, 2023 by appleblossom