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ARTICLE · 27 JANUARY 2022

UK Home Purchases For US Individuals

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Estate agents and conveyancers in the UK usually advise married couples to buy homes as beneficial joint tenants. This means if one of them dies, the other inherits the home automatically...

GlobalReal Estate and Construction
Penelope Warr
Penelope Warr
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Key points at a glance

Estate agents and conveyancers in the UK usually advise married couples to buy homes as beneficial joint tenants. This means if one of them dies, the other inherits the home automatically and without the complications of probate. However, if one of the couple is a US person, joint tenancies can create numerous complex and unwelcome tax consequences. The examples below highlight why US persons should always take US tax advice before buying property in the UK.

US federal income tax on the gain on sale

If a married couple has bought their home as joint tenants 50% of any gain realised when the property is sold will be attributed to the US spouse; but only US$250,000 of that amount will be tax-exempt for main residence purposes. This is in stark contrast to the UK tax position, where the entire gain on sale of a principal private residence is generally exempt from UK capital gains tax. So although there's no UK tax payable when a home

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