the truth about taxes, property and pensions
However, Mr Cole said most Britons will still be able to take advantage of the tax break but will have to justify it. âThere is no simple answer to this subject. Some US tax advisers are relying on the US-UK tax treaty to fully exclude the 25% lump-sum distribution of US tax, âhe said.
Meanwhile, other advisers have argued that retirement money is taxable in the United States, but excess foreign tax credits can be claimed to help eliminate or reduce the bills.
“The position should be discussed with an adviser – this is particularly important if state income taxes are relevant, as either route may not be effective in preventing tax at the level of. the state, âhe said.
The quirks of inheritance tax to know
American inheritance tax can be surprisingly expensive when it’s not planned. The first $ 11.7 million of a person’s estate is exempt from inheritance tax, but this only applies to those who are considered domiciled in the United States for federal tax purposes.
The generous upper limit drops to a measly $ 60,000 exemption for anyone who is not officially domiciled in the United States, Gray said. “It catches a lot of people, so taxpayers should get advice on whether they are considered domiciled or not,” she added.
US citizens and green card holders are still referred to as âdomiciled,â which is usually the case when someone intends to make America their permanent home.
This is assessed across a range of factors including time spent in the country, whether or not they intend to stay in America indefinitely and the location of their primary residence.
Buying property in the United States
The cost of living varies widely across America. States, including New York and California, have some of the highest costs of living in the country, but also some of the highest taxes.
Buying a property is slightly more expensive in America, with the average house selling for $ 378,700 (Â£ 273,000) compared to the average UK house price of Â£ 266,000. That’s according to figures put together by Knight Frank realtors of the National Association of Realtors.
Some regions are much more expensive than others. The costliest regions in 2020 were Hawaii (with an average property costing $ 608,900), the District of Columbia ($ 575,700) and California ($ 524,400), according to figures from real estate website Zillow. Meanwhile, Arkansas ($ 156,800), Oklahoma ($ 154,900) and West Virginia ($ 145,400) were among the cheapest.
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