How to sell a UK house, buy a US house and everything in between
November 18, 2016 8:04 AM   Subscribe

We are an early-30s couple with two children who live in London and intend to emigrate to the US in mid-2018 (specifically Los Angeles, California). Help us please!

Husband is American and wife is British. Our kids have British passports but we will be applying for their American ones soon (as well as wife’s green card, but that’s a separate question). We own our home in London in a neighbourhood with rising property values (valued currently at around £725,000, with £330,000 remaining mortgage) and have savings in the region of £70,000. We have excellent credit in the UK but no established credit in the USA. For the sake of this question, let’s assume Brexit/Trump doesn’t tank the global economy.

Our goal is to be able to purchase a family home in Los Angeles (up to 1.5 million budget) within the next 5 years (ideally asap, but that’s where this question comes in…). We would expect to sell our UK home to finance this purchase.

Assuming we have $580,000 after the sale of our home (at current exchange rate/value) what do we need to know? How do we make this all happen?

What income is needed and over what period of time? Does only US proof of income apply?

How do we bring money from sale of UK house to USA? Do we get taxed? If so, how much?

We are currently visiting L.A. for the next 3 months and are wondering what steps we can take in the immediate future to get the ball rolling. We both already have a bank account here. Husband’s mother lives here and he uses her address for bills/correspondence, but nothing formalized. He also can get a California ID with little trouble in the time we are visiting if this would be helpful.

What elements are we not thinking of that should also be considered? Probably many!

We want to make sure we do everything correctly to make this a reality as quickly as possible. Thank you in advance!
posted by anonymous to Work & Money (6 answers total) 2 users marked this as a favorite
Work on building your credit. Get a credit card - secured, if you have to. (For a secured credit card, you pay a security deposit that, in most cases, is equal to your credit limit.) You will need to use your husband's mother's address. Charge at least one thing on it every month and pay off the balance in full.

(I just moved back to the US after 10 years in the UK, so my previous credit history was pretty much nonexistent. I'm basically starting over with a secured credit card and it sucks but having an existing bank account helps.)

The California ID will help a lot. I'm not sure what the legality of applying for one of those while you aren't living in the state is, though. If it were me, I would probably chance it and do it anyway, but this is not any sort of advice, legal or otherwise! It may have tax or other implications. (Your husband has been filing his US tax returns, right? Even if he doesn't owe any money, he still has to file a return every year.)

If your husband does go the California ID route, he will need several proofs of identification. I'm not sure about the California rules, but I had to have 4 for Indiana, including two proofs of address and my social security card.

If you'll be moving money using a forex service or something similar, be aware that most UK banks have a daily transfer limit, so you may have to make payments to a forex service in stages. (For example, Natwest's limits are £20,000 online, £10,000 over the phone. In branch the limit is higher.) You'll be dealing with much higher amounts of money than I was, though, so your options may be wider.
posted by minsies at 8:25 AM on November 18, 2016 [1 favorite]

How is MIL's credit? Will she be able to co-sign a loan? This is assuming that all parties are very responsible with their credit and expenses, of course. And further assuming that husband and wife will re-finance 2-5yrs down the line to get the loan out of MIL's name, once your US credit is better established.

Is there a bank that has both a UK and US presence that you could apply for a mortgage to, that could take your UK credit history into account?
posted by vignettist at 8:47 AM on November 18, 2016

Probably the most important metric (beyond your U.S. credit score) will be your DTI: your monthly debt-to-income ratio. Debt means all debt: credit cards, student loans, etc. A reputable bank might approve you for up to 40% DTI, but it's frankly unwise to exceed 35% and by far the soundest practice not to exceed 30%. Income means recurring, reliable income. If you two are planning to change jobs when you come to the U.S., you're going to have a hard time. You won't be able to buy a new house until you sell the old house. You will find it challenging to get approved for a new mortgage when the bank will know that you are planning to leave your current jobs and you don't yet have a salary history in the U.S. (getting a mortgage based on an offer letter was very hard in the last few years, though I hear there may be some softening on that front).

Agree that you should set about building a U.S. credit score ASAP. My general impression is that foreigners with no U.S. credit history usually have to make house purchases in all cash or at eyewatering costs.
posted by praemunire at 8:51 AM on November 18, 2016

Yes, agreed, get a credit card if you can! I've heard of people building credit by taking out small loans and paying them off quickly and responsibly (i.e., small car loans, etc.) to build credit. Of course, I agree, all of this depends on your jobs. If you have a super high paying job in the US (or you both do) that will obviously help a lot.

It sounds like you'll probably have to sell your UK place first, and then perhaps rent for a bit in LA. That wouldn't be such a bad thing. It can be hard to move straight to a new place and buy anyway; you kind of want to be completely sure about the neighborhood. This way, you can also watch currency movements to see whether you'll get the most bang for your buck!

Also, that sounds like a pretty large budget for a house considering that you only have 70k in any other savings. Might you consider keeping some money back for retirement/college savings for your kids? Not to mention moving costs, which could be enormous from the UK, and presumably buying two new cars in LA. But people have different thresholds for how much money they need to have in other savings, so maybe that's fine.

Tax-wise, I'm no expert, but your husband as an American citizen has to pay taxes on the capital gains from the house (probably) whether you move or not. See Boris Johnson.

Good luck -- sounds like an exciting move!
posted by EtTuHealy at 9:41 AM on November 18, 2016

Married couples get an up to $500K exemption from capital gains tax on the income from the sale of a first home. But I presume that an American citizen planning to move back to the U.S. has shown the basic competence to continue to file his U.S. taxes, and so you are already taking possible taxes on part of the sale into account. (On the very off chance your husband has not been doing so, stop. You are not allowed to take out a huge U.S. mortgage until you know how to handle your business. There's no better way to blow up your existence.)
posted by praemunire at 9:57 AM on November 18, 2016 [1 favorite]

Your biggest barrier to getting a mortgage will be lack of credit history in the US. UK credit history doesn't count. So you're unlikely to be able to get a good mortgage rate without a couple of years' credit history. And yes, you'll need ID. Make that happen!

Amex recognize international accounts for US credit history purposes. So if you don't already have an Amex card, get one now. When you move, you can get a US card (and keep the UK card), and your UK credit history will be recognized by the US credit agencies..

Look at banks that have both a UK and a US presence - makes it easier to transfer money and develop credit history. I tried Citibank, which looked like it would work out well except it turned out they didn't have a branch in the US city I moved to (pretty sure there will be at least one LA branch though).

Secured credit cards are a necessary evil. 9 months and they'll convert it to a normal card, and probably offer you a credit limit increase too (well, that's how it worked out for me, YMMV).
posted by finding.perdita at 7:41 AM on November 19, 2016

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