Buying in the UK or keep renting and send extra money home??

My British husband and I are thinking of buying a house next year. House prices where we are (Southeast) are high. We are going to have to spend £200,000. The bank will give us a lot more than that, but that's the most I want to spend. Considering at home what you can get for $400,000...it seems a huge ripoff! 

However, I am now wondering whether it wouldnt be a better idea to keep renting and to send the extra money home to a USA account while the exchange rate is so good.  So rather than pay a £1200 mortgage....we could pay our £600 rent and send £600 back home each month which means $1200 dollars a month in savings there...over a year that is a lot of money.

Will I suffer all sorts of tax problems or red flag myself to the IRS by doing so? Im not sure what kind of account to send the money to. Currently I just have savings in a credit union and a checking account. Is there a better account to send money to?

We plan to stay in the UK for the foreseeable future as we both have good jobs here, but we dont plan to have children so buying a family home isnt a necessity.

Any thoughts?

You might want to check the interest rates in both countries. We've decided to keep our savings in the UK for now, because the interest rates on our US accounts are so low.

You might want to check the interest rates in both countries. We've decided to keep our savings in the UK for now, because the interest rates on our US accounts are so low.

Yeh, we are saving for a house in the US but are keeping our money in a ISA over here for the time being because we get a high interest rate on it and couldn't find an account in the US that would give us as good of a interest rate (if anyone knows of one, im open to hear about it).  Although, i suppose we are risking the exchange rate dropping... but the fluctuation of the exchange rate is always a risk. Could go up, could go down....

This gets discussed a bit on here, and there are lots of different opinions.  They are usually split between the 'property is always a good investment' brigade and the 'housing is not a safe investment in the UK right now' people. 

I don't think it's a good time to buy in the UK.  I see a lot of evidence that the market is completely unstable, and hear a lot of stories about people struggling with huge debts and negative equity.

In short, I would recommend waiting to see what happens.  £200k won't get anything like the kind of place you'd get for that in the US, and you would kick yourselves if you bought in 12 months only to find that the value has dropped further two years down the line, which is a possibility.

Vicky

True.  And once our loan is paid off we can move into a bigger place to rent. There is a little english cottage with a huge garden backing onto fields for 850 one town over...I would be happy there and wouldnt feel like i was throwing money away on rent if I was able to increase my USA savings account by 1200 dollars a month. Even if its a bad rate on US savings account, its still doubling your money...and if we plan to buy in the USA in a few years then its a good bet.  Just wondering if the tax man hits you if you send home that much money in a year?

I'd assumed that when you transfer the money to US bank account the interest is taxable.  I'm not sure if the principal amount you transfer is taxable?  I would have thought the money is earned in the UK and you can exclude this foreign income on your tax return.

Does anyone know what would happen if you transferred, say, $200,000 - $300,000 to a US bank account after the sale of your UK home whether that amount would be taxable?  I know private sales of UK homes are not taxable but what would the IRS say about transfering this money to a US account?

Does anyone know what would happen if you transferred, say, $200,000 - $300,000 to a US bank account after the sale of your UK home whether that amount would be taxable?  I know private sales of UK homes are not taxable but what would the IRS say about transfering this money to a US account?

Disclaimer: I am not a tax lawyer or accountant.

AFAIK, the IRS draws no distinction as to where the house is located.  If you sell it, the profits are taxed as a capital gain, though if you plow the proceeds into another house, the tax can be averted (and it's this feature of the tax code that, IMO, played a major role in the inflation of the housing bubble... when you effectively prevent market participants from taking money out of the game, you are virtually guaranteeing that a bubble will form).  In any case the IRS is unlikely to tax the repatriation of the proceeds.