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residence under certain IRS defini- tions then each owner is entitled to receive a $250,000 gain exclu- sion on the sale before any US tax applies. The fluctuation of foreign currency exchange rates can have a large impact on the recognition of gains upon disposal of real prop- erty. The exchange rate on the date of purchase and the date of sale are used to determine the taxable gain in local currency. When a mortgage is paid off


on a foreign property, the owner also must calculate whether there has been a gain or loss on the disposition of the mortgage due to exchange rate fluctuations. If a mortgage costs less at settle- ment due to the exchange rate at


sale and the date the mortgage was obtained, the portion of gain recognised on the mortgage repay- ment is taxed at ordinary income tax rates. Without careful considera- tion of the currency fluctuation over the period of ownership, a taxpayer can sometimes unknowingly create large gains in local currency.


Andrea Solana is Head of Advanced Planning at MASECO Private Wealth. Andrea gradu- ated from University of Virginia’s McIntire School of Commerce with a degree in Finance and Management, completed her MBA at Imperial College London and holds her US Series 65 license.


If you would like a full copy of MASECO’s 39 Steps to Smart Living in the UK please visit www.masecopw.com.


MASECO Private Wealth is not a qualified tax adviser and you should seek separate advice on your tax position with a suitably qualified tax adviser. MASECO LLP trading as MASECO Private Wealth is authorised and regulated by the Financial Conduct Author- ity. The Financial Conduct Authority does not regulate tax advice.


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