America is a country of immigrants, many of whom have investments in property. If you fall into that category, or if you are a foreigner fortunate enough to own property in the US, you’ll be interested in the legal ramifications of property ownership. Besides for the logistical issues (you are here and the property is there), selling property is riddled with obstacles. The most important of these are finding reputable professionals to facilitate the sale, tax liability obligations, insurance coverage, and funds transfers, among others.

Always Have an Exit Strategy

Few immigrants to the US are aware that they are 100% liable to the Internal Revenue Service (IRS) when they sell property abroad as a green card holder, or citizen. In other words, the purchase price and the sale price will be considered for all capital gains taxes due to the IRS. Tax attorneys advise impending immigrants to sell their properties and transfer the money before they become green card holders. Since all tax reporting is done in USD, it is especially important to ensure that the highest possible property price is achieved, with the lowest exchange rate and bank fees.

Before you even consider selling a property overseas, it is imperative that you have an exit strategy for the money. If a property has been fully paid off, all the funds are available for transfer abroad. Banks and traditional financial institutions are notorious for the high fees, commissions, and charges they levy on money transfers. It befits clients to take a careful look at a list of recommended money transfer services before adopting the default route.

Purchasing Overseas Property in the United States

Investors seeking viable opportunities abroad will note that the American property market differs considerably from that of Europe, Asia, and Australia. Expatriates should be cognizant of the value-added services available in the US. These are designed to safeguard investments for buyers and sellers alike.

Home Warranty Services offer insurance to anyone selling a home or purchasing a home in the US. These insurance services are expressly designed to take care of contingencies if systems and appliances stop functioning.

As a case in point, California homeowner warranty services include a broad sampling of the best providers of home warranty coverage for the Golden State. The diversity of states like California, Alaska and Texas requires comprehensive home warranty services providers for the best possible coverage.

Steps to Take When Selling a Property Abroad

Once you have decided to relocate from one country to another, there are many contingencies to consider. Packing up and going is a major social, economic, social, and emotional decision.

Tax considerations aside, there are also many legal implications that need to be considered. Who will be responsible for managing your overseas property while you are abroad? Who will facilitate the smooth transfer of ownership? What if the property sale falls through? Do you purchase a new property before the funds transfer has been completed?

These are all important questions that require careful attention. IRS tax requirements do not warrant the reporting of a purchase of a new property – it’s the sale of the property that needs to be reported.

Should You Use Banks Every Step of the Way?

When you are selling your property abroad, you will invariably be dealing with banks, unless you have paid off your property in full and you have a cash buyer. There may be various financial and legal filing requirements when selling a property abroad and repatriating that money back to your new country. In the United States, it is imperative that a full report of foreign bank and financial accounts is made. This is known as the FBAR requirement.

There will be different requirements for the host country and your home country vis-à-vis property sales. But as a property owner, your most pressing concern is your money. How will you get your money out of the country? It is important to go with a reputable money transfer service provider to ensure that you get the maximum amount possible out of the country. Careful research is needed to ensure that you don’t spend thousands of dollars in brokerage fees, exchange rates, hidden charges, and bank commissions.

The IRS Treats Exchange-Rate Gains Unfavorably

The exchange rate is one of the most pressing concerns when selling property abroad. It is known that banks can charge upwards of 3.5% for a one-way transaction, and 7% for a two-way transaction of money from country A to country B, back to country A again. If you cleared $200,000 in profit on the sale of your property, that could be reduced by $7,000 each way courtesy of the banks.

Originating banks and receiving banks also tack on additional charges when funds are transferred internationally. Bear in mind that any exchange-rate related losses that you incur cannot be used as a tax-deductible expense since these are personal expenses. The flipside of the coin is that any exchange-rate gains you make on the sale of your property are taxable – so bear that in mind.

The amount of time that you lived in the foreign property – a primary residence or a secondary residence – also factors into the tax equation. If you lived there for at least 40% of the last 5 years, you can exclude all gains associated with the sale of the principal residence. There are many important aspects to consider when selling your property abroad, and it may behoove you to consult with a tax specialist, real estate professional, and expert money transfer service company before you get started.

If you have recently inherited a property, the decision about potential next steps can be daunting. It is important to be fully aware of what is required of you, what you’ll need in order to be successful in selling the property, and to know where to go for expert information or support.

In the initial stages, there are a few important issues to address in order to make preparations before a sale. Firstly, consider the nature of your inherited property and the type of ownership you have; are you the sole inheritor, or will a decision be required as a group? Depending on whether a valuation of the property has already been performed (e.g. if a person had this calculated in their will), you may need to find out how much the property is valued at. Alongside this, it is essential to be clued up on how tax on inherited property works, and how this may be affected by the sale of the estate.

You will need to have a Grant of Representation, or ‘Probate’, before you are able to sell the property. Finally, consider your selling options – are you looking for a fast and efficient sale through a specialised company, or are you looking to do the work yourself?

Types of ownership

Property is often passed to descendants or beneficiaries through the terms of a deceased person’s will. However, rules differ according to how the property was owned and split, and how this might be addressed in the deceased person’s will. Be sure you have a clear idea of how your share works, and if you have the permission of other parties to sell the property.

If, as addressed on the UK Government’s website, property was previously owned through a ‘joint tenancy’ agreement, the property would usually automatically go to the surviving partner(s). Clearly, it is important to establish effective communication regarding the sale if property is distributed through more than one heir.

Once you are clear on the particulars of owning the inherited property, you will need to consider how the law on Capital Gains of probate property may affect the sale of your house.

Taxes on property

Inheritance Tax is usually paid by the estate of the deceased, as the UK Government’s website points out. However, you may need to pay Capital Gains tax if you sell the property at a profit at a later time. These rules are different if you live abroad, and separate rules may also apply if you own another home.

Calculating whether a profit will be made on a sale involves a calculation of the market value of the property. This is required for an evaluation of Inheritance Tax value, so can usually be found in this way (if this has been calculated by the benefactor). In some cases, the value of the property may not have been calculated before the person died. In this case, an estimation of the worth of the property is required before anybody has the legal right to deal with the estate. You can do this by hiring a Chartered Surveyor to estimate the value of the property, or by utilising the services of estate agents to provide a probate property valuation. Using the average value of 3 estate agents’ estimations, HMRC will use this value to calculate any Inheritance Tax due.

Granting Probate

Where an executor has been named, they can apply for a grant of representation, which gives them the authority to deal with the matters of the estate.

To successfully be granted a Grant of Representation (or ‘Probate’), applicants will need to provide several pieces of information about the person who has died, including details on their assets, legal status, copy of their will, death certificate, and codicil if relevant, and a summary of their inheritance tax details, and send this to the relevant Probate Registry. This process can take some time – with a straightforward sale taking a minimum of 2-3 months.

Once Probate has been granted, you have a few options in the selling of the estate. You can choose to undertake the selling of the property as an individual, or enlist the help of experts to take off some of the pressure. Companies such as Probate Purchasers often ensure a quick and efficient sale of probate property, for example.

Essential knowledge and considerations

It is important to have a good knowledge of the processes required of you, before an inherited property can be sold successfully. It may be an idea to make a list of the questions you need to answer: how the property may be divided between stakeholders, if all of the relevant valuation information has been gathered, and if any Capital Gains tax will apply when you sell the property.