Published 19 June 2026 · Updated 7 November 2026 · 3 min read
Selling a house or a portfolio while you are a US person in the UK is one transaction with two tax computations. They use different rates, different reliefs, different cost bases and, because the US works in dollars, a different gain.
UK side
For disposals from 30 October 2024, UK capital gains tax is 18% for basic-rate taxpayers and 24% above that, for residential property and other assets alike. The annual exempt amount is £3,000 (2025/26). Business Asset Disposal Relief gives a reduced rate on qualifying business disposals within a lifetime limit (14% for 2025/26, rising to 18% from April 2026). Gains go on the SA108 pages; UK residential property disposals with tax due are reported and paid within 60 days of completion.
US side
Long-term gains (held over a year) are taxed at 0%, 15% or 20% depending on income; short-term at ordinary rates. Net Investment Income Tax adds 3.8% above US$200,000 of modified AGI (US$250,000 joint). Depreciation previously claimed on let property is recaptured at up to 25%. Everything is computed in dollars: purchase price at the rate on the purchase date, proceeds at the rate on the sale date, so a flat sterling price can still be a dollar gain or loss.
The credit
UK CGT is creditable against US tax on the same gain in the passive basket. Where UK rates exceed US rates the excess carries forward ten years. Foreign tax cannot be credited against NIIT, so the 3.8% is often a real residual cost for higher earners.
Your home: Private Residence Relief versus Section 121
UK relief exempts the period the property was your only or main residence plus the final nine months, with limited lettings relief. The US excludes up to US$250,000 (US$500,000 joint) of gain if you owned and lived in the home for two of the last five years, reduced for non-qualified use and never covering depreciation. A couple who always lived in the house will usually pay nothing in either country on the property gain itself.
The mortgage currency gain
Repaying a sterling mortgage after the pound has strengthened against the dollar produces a section 988 gain taxed as ordinary income in the US. Example: £300,000 borrowed at 1.25 (US$375,000) and repaid at 1.40 (US$420,000) is a US$45,000 taxable gain, with no UK tax to credit. A weaker pound produces a personal loss that is not deductible. This is the item most often missed on a UK home sale.
Shares, funds and ISAs
UK shares in operating companies are ordinary capital assets in both countries, but the cost basis differs: UK share pooling and the same-day and 30-day rules against US specific identification or FIFO. UK funds are usually PFICs, with their own regime. ISA gains are UK-free but fully US-taxable with nothing to credit.
Inherited assets
Both countries rebase to market value at death, the UK in sterling and the US in dollars at that date's rate, so the two bases diverge immediately.
Non-residents
A US resident who keeps a UK property pays UK non-resident CGT on disposal, on the gain since April 2015 for residential property (April 2019 for commercial) where the asset was already held, with the same 60-day return.
Frequently asked questions
I paid UK CGT. Do I still owe US tax?
Often not, after the credit, except for NIIT and any currency gain on the mortgage.
When do I report a UK property sale to HMRC?
Within 60 days of completion if tax is due, then again on the Self Assessment return for the year. The US reports it on Schedule D for the calendar year of sale.
Written by the US UK Expat Tax advisory team. Last reviewed 7 November 2026 · Figures relate to the 2025 / 2025-26 tax year unless stated.
Primary sources checked
General information, not personal tax advice. Rules and thresholds change; we confirm the position for your facts before any work.