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London mayor pays sales tax on English house...to the IRS?

Mayor Boris Johnson learned a hard lesson: he can hold US-British dual citizenship. And with it, US-British dual taxes.

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    London Mayor Boris Johnson waves to reporters before disembarking on a train during an official visit to Kuala Lumpur last month. Mr. Johnson has reportedly paid a US capital gains tax that he had previously described as "absolutely outrageous."
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When US authorities hit London Mayor Boris Johnson with a tax bill for the sale of his house in North London, he called the demand “absolutely outrageous” and refused to pay.

But that was back in November. On Thursday, the Financial Times reported that the mayor has since changed his mind. He’s decided to settle up just weeks ahead of a scheduled trip to Boston, New York, and Washington.

Mr. Johnson, who was born in New York, holds dual American-British citizenship. Although he hasn’t lived in the US since he was a child, American law requires all citizens to pay taxes on worldwide income, wherever they are living at the time.

So when Johnson decided to sell his first house last year, the US Internal Revenue Service sent him a bill. Unlike Britain, the US levies a capital gains tax on proceeds from the sale of a main residence. US law also requires citizens to pay taxes on foreign earnings above $97,600. 

Johnson’s decision to settle the bill stands in sharp contrast to remarks he made last year during an interview on National Public Radio. When asked whether he would pay, Johnson said: "No is the answer. I think it's absolutely outrageous. Why should I? I haven't lived in the United States since I was five years old."

Johnson refused to disclose how much he owed to the US for the sale and his spokesman told reporters that “the matter has been dealt with,” according to the BBC. "The mayor won't be saying anything more on the subject,” the spokesman said.

But sources close to the mayor told the Financial Times that the bill was “nowhere near the £100,000 ($150,000) estimated by some tax experts.” The newspaper used property sales records to estimate that Johnson faced a tax bill of about $44,000 from the sale. It is unclear how much the house sold for.

As one of Britain’s most popular politicians, Johnson is widely considered the top candidate to succeed Prime Minister David Cameron as head of the ruling Conservative Party should the party lose the next election in May. He is expected to return to parliament in the safe seat of Uxbridge and South Ruislip, The Guardian reports.

Paying the tax bill should allow Johnson to renounce his US citizenship, which he has previously said is "very difficult to give up." But doing so is not mandatory for him to be eligible to run for prime minister. 

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