US Brokerage taxes on HK stocks
Discussion
Hi all,
I'm a Brit, who's resident in Hong Kong. I have invested in HK stocks and ETFs through my HSBC HK account, but their fees are extremely uncompetitive, and their platform is indeed rather basic. So, I'm looking to use one of the big online trading platforms.
I'm hoping someone may know what my tax liabilities may be in this scenario.
Given my citizenship and legal residence, I am wanting to set up an account with Interactive Brokers. I have been approved, as they allow foreign investors/residents to trade with them.
They are incorporated in the USA, with offices around the world, including HK. I can trade HK stocks, ETFs etc. with them, as well as US and other international markets.
Am I understanding correctly, if I think that I am not liable for US capital gains tax on HK securities that I buy through IB, other than dividend tax?
I know that I am liable to the IRS for capital gains taxes on any US securities, but that should form only a small part of my portfolio. The nice thing with HK, is that there are no capital gains taxes, apart from a couple of property cooling measures.
So, I'm hoping (and thus far, believing) that as a HK resident Brit, I am not liable for US CGT on stocks that were bought using a US brokerage.
Can anyone shed any light to confirm/deny my understanding?
Any help would be greatly appreciated.
I'm a Brit, who's resident in Hong Kong. I have invested in HK stocks and ETFs through my HSBC HK account, but their fees are extremely uncompetitive, and their platform is indeed rather basic. So, I'm looking to use one of the big online trading platforms.
I'm hoping someone may know what my tax liabilities may be in this scenario.
Given my citizenship and legal residence, I am wanting to set up an account with Interactive Brokers. I have been approved, as they allow foreign investors/residents to trade with them.
They are incorporated in the USA, with offices around the world, including HK. I can trade HK stocks, ETFs etc. with them, as well as US and other international markets.
Am I understanding correctly, if I think that I am not liable for US capital gains tax on HK securities that I buy through IB, other than dividend tax?
I know that I am liable to the IRS for capital gains taxes on any US securities, but that should form only a small part of my portfolio. The nice thing with HK, is that there are no capital gains taxes, apart from a couple of property cooling measures.
So, I'm hoping (and thus far, believing) that as a HK resident Brit, I am not liable for US CGT on stocks that were bought using a US brokerage.
Can anyone shed any light to confirm/deny my understanding?
Any help would be greatly appreciated.
I can maybe shed a little light on US cap Gs on funds intended for US Residents. (ans why they will probably not apply to you)
US domiciled funds or funds designed for US residents have to distribute gains from within the fund to share holders usually in December. These gains are taxable even though the fund is not sold.
Example
A fund boufght during 2012 for 10K with current value 12K has a combined long and short term C.G. of 1K.
We pay tax on the dist of 1K, but the cost basis is now 11K, so going forward there is less CG liability.
Sort of Pay as you go
It will state in the prospectus whether a fund is suitable (legally suitable) for US person.
No tax is withheld, it is up to the individual to report the distributions (as the brokerage will)
These can be offset against CG losses but we have no C.G. allowance like UK
If you are not a US person, ie not required to file a US tax return you do not need to report CGs or pay US taxes.
PS Sometimes funds pay foreign taxes on their holdings don't forget to credit these to your return in whatever country you file (UK or HK)
ETA I don't read well
If it's only shares you are only liable in your country of filing, all that fund stuff is a waste of ink (bytes) Sorry.
US domiciled funds or funds designed for US residents have to distribute gains from within the fund to share holders usually in December. These gains are taxable even though the fund is not sold.
Example
A fund boufght during 2012 for 10K with current value 12K has a combined long and short term C.G. of 1K.
We pay tax on the dist of 1K, but the cost basis is now 11K, so going forward there is less CG liability.
Sort of Pay as you go
It will state in the prospectus whether a fund is suitable (legally suitable) for US person.
No tax is withheld, it is up to the individual to report the distributions (as the brokerage will)
These can be offset against CG losses but we have no C.G. allowance like UK
If you are not a US person, ie not required to file a US tax return you do not need to report CGs or pay US taxes.
PS Sometimes funds pay foreign taxes on their holdings don't forget to credit these to your return in whatever country you file (UK or HK)
ETA I don't read well
If it's only shares you are only liable in your country of filing, all that fund stuff is a waste of ink (bytes) Sorry.
Edited by jeff m2 on Thursday 3rd January 16:46
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