Although as many as 20,000 Brits emigrate to America every year, an even bigger number buy property for short- and long-term holidays and investment purposes. In recent years, these non-resident buyers have been able to enter the American property market safe in the knowledge that if they choose a home wisely it will serve as a cast-iron investment.

However, America's property market now displays less promising economic fundamentals.

For example, the Assetz Property Investment Tracker for autumn 2006 revealed that house price growth in the United States had slowed from 12.9 per cent in the summer quarter to 10 per cent three months later.

Assetz managing director, Stuart Law, believes that a slowing growth rate combined with the weakness of the dollar against the pound could spell further bad news for the US property market: "The United States could be on the brink of a significant house price retracement and the future of the property market will become clear over the next three months. It is quite possible we will see price drops on an annualised basis for the first time in decades, through 0 per cent, into negative growth. The big question is whether the US will see the same soft landing that was seen in the UK. With far fewer restrictions on available land, I believe it is susceptible to negative growth as the effect of continuous rises in interest rates over the last two years or so have caused a shock to the consumer, the effect of which is still to be fully realised."

Therefore, for those British holiday and investment property owners now selling up in a climate that favours the buyer more than the seller, making certain that they maximise the return on their investment becomes even more crucial.

According to Mike Arman at Integrity Financial, a significant stumbling block to this is ignorance by property sellers not resident in the US of how the Internal Revenue Service (IRS) collects tax on the profit realised through the sale.

"When non-US citizens sell US real estate, the IRS automatically withholds ten per cent of the selling price. This is their guess as to how much tax you 'may' owe on the profit from the sale. If you don't know how to go about getting it back, they'll simply keep it," he explains, adding "They shouldn't - this is your money - and yes, you can get it back."

While Arman says that the theory of recovering this money is simple - "Just figure out how much money you actually didn't make, and apply for the refund. Capital gains taxes in the US are based on profits, so if you made no profit, you owe no taxes" - he admits that the practice is "a lot more complex".

However, it is possible. Arman claims that "A talented accountant should be able to prove to the IRS's complete satisfaction (that is, legally) that you didn't make any profit at all on this sale, and are thus entitled to a full refund".

For those now thinking of selling up, and indeed those about to enter the US property market, it's certainly something to consider if you want make as much money as you should in a market that may not be doing you too many favours for the time being.

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Article first published on 12 September