UK citizen, living in the US, wanting to cash buy in the UK

[Alexander Williams]

My wife and I are contemplating buying a home for our parents who are in the UK and in their 70s but rent and the uncertainty of whether their rent will increase, their landlord will sell etc.. is starting to cause them significant concern. 

We can cash buy a small home for them.

Has anyone done this? i.e. bought a home in the UK, whilst living in the US.

If they want to pay rent what options exist?

Any guidance on tax implications here in the US?

Thanks

[Mike Lambert]

It looks like you'd buy a property for your parents to use but you'd keep it in your own name.

I'm a bit confused about your sentence "If they want to pay rent what options exist?". It seems to suggest that you'd be happy for them to live there without paying but that they might be insisting on paying rent. In any case, if they end up paying rent, I'm not sure which type of options you're talking about. They just do an international wire to you to pay or you open a bank account in the UK for that purpose and they pay you there.

Regarding taxes, you'd first have to pay all the applicable taxes in the UK, including the income and capital gains taxes. You'll have to pay taxes in the US as well (income and capital gains only). However, by virtue of the US/UK treaty for the avoidance of double taxation, you could credit the income and capital gains taxes paid to the UK against your US income and capital gains taxes. However, you need to check if the treaty covers real estate income and capital gains taxes. In that case, you'd end up paying taxes at the highest rate between the two countries.